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Dreamliner: Checks Fail To Find Battery Fault

(c) Sky News 2013

Airline safety inspectors have failed to discover faults on the 787 Dreamliner battery production line, as the boss of Boeing (NYSE: BA - news) prepares to address issues about the plane's global grounding.

"We have found no major quality or technical problem," an official at Japan's transport ministry said, as Japanese and American safety inspectors ended a week-long probe at battery maker GS Yuasa.

Aviation regulators have focused on the lithium ion batteries as the cause of a problem that forced an All Nippon Airways (ANA) flight to make an emergency landing on January 16.

But officials said there were no signs of a battery fire, while information gleaned from the flight's digital data recorder showed the power pack did not suffer a rapid surge in voltage.

GS Yuasa, whose shares spiked 4.77% after the announcement, is just one of many contractors in a complex global chain that led to three years of delays before Boeing delivered its first 787 to ANA in 2011.

The so-called green aircraft, built on a composite construction basis, contains more than a third of components made in Japan.

Japanese officials reportedly eased safety regulations ahead of the aircraft's rollout - to help boost the country's technology sector.

According to Reuters, the concessions by an advisory panel to Japan's transport ministry were to help support local firms that supply 35% of the 787 from the carbon-fibre in its wings to sophisticated electrical systems.

Meanwhile, US investigators said the Dreamliner that experienced a battery fire earlier this month in Boston was delivered to Japan Airlines (JAL) less than three weeks before the fire occurred at Boston's Logan airport.

The slow progress of investigations into battery problems on the Dreamliner also suggests the new plane could be grounded for months, raising fears that the financial hit to Boeing will be greater than had been initially predicted.

Wall Street had been working on the assumption that safety inspectors would quickly find the root cause of two battery incidents in the US and Japan within weeks.

The economic hit to Boeing has now been forecast to cost between $500m (£320m) up to $5bn (££3.2bn) in lost revenue, according to Jefferies and Co analyst Howard Rubel.

Boeing chief executive Jim McNerney will address shareholders on January 30 when the company delivers its 2012 results.

Both ANA and JAL have already said they planned to cancel hundreds of flights in the coming weeks as a result of the grounding, while other carriers are also affected.

The Associated Press said Dreamliner had a rushed development schedule and "unusual construction plan" as it sought to fight back against sector leader Airbus (Paris: NL0000235190 - news) over a decade ago.

Codenamed Yellowstone, it promised to be lighter and more technologically advanced than any other, half-built with plastics instead of aluminium along with better comfort and 20% lower fuel costs.

But once production started, the gap between vision and reality quickly widened and became plagued with manufacturing delays, cost overruns and sinking worker morale.

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