Boeing Fire Mystery Has Been Solved

Boeing Dreamliner Airplane Wing

Since flames engulfed an empty Boeing (NYSE:BA) 787 Dreamliner parked at London’s Heathrow Airport on Friday, doing serious harm to the plane, investigators have been searching for an explanation for the blaze.

The United Kingdom’s Air Accidents Investigation Branch said Saturday there was no evidence the lithium-ion batteries directly caused the fire, leaving open a wide range of possible causes that could have a varying impact on the jet’s future, including isolated human error or a new design flaw in the Dreamliner’s advanced electrical system, one of the plane’s key innovations.

But the speculation is now over: The investigation by the U.K. regulatory body determined that the fire, which caused “extensive heat damage in the upper portion of the rear fuselage,” was the result of a malfunction of the Honeywell-manufactured (NYSE:HON) emergency locator transmitter, or ELT.

The investigators gave Boeing and the U.S. Federal Aviation Administration two safety recommendations in a special bulletin released Thursday — first, the FAA should “initiate action for making inert” the ELT system in all 787 planes until “appropriate airworthiness” can be determined and  second, the FAA should also conduct a safety review of all lithium-powered ELT systems in other types of aircraft.

“Had this event occurred in flight it could pose a significant concern and raise challenges for the cabin crew in tackling the resulting fire,” the U.K. agency said in its report. The report also noted that it is “extremely rare” for emergency transmitters to overheat and that the Ethiopian Airlines fire was the first incident to affect the Honeywell system. What is not known is whether the fire was ignited by a release of energy in the battery or by an external mechanism, like an electrical short.

In a press release, Boeing announced it would comply with both recommendations. Removing the beacon, or ELT, will be a “simple maintenance task,” requiring just an about an hour to complete, company spokesman Doug Alder told Bloomberg in a telephone interview. Boeing will instruct airlines how to remove the device and provide any needed assistance, he added, noting that all 68 Dreamliners delivered to airlines thus far have Honeywell-built ELTs.

However, what will be more difficult is Boeing’s handling of the public relations aspect of the incident. As Bloomberg noted, it is the most serious setback for the company’s marquee jet since issues with lithium-ion batteries in the 787’s power system forced a grounding of all Dreamliners in January. Still, shares of Boeing have recovered from the dip they took on July 12, and shares are trading a little more than a dollar bellow their 52-week high.

The problems with the batteries and the beacons are in no way linked. The U.K.’s AAIB noted that the ELT’s battery chemistry is entirely different. The beacons rely on chemical batteries made of lithium-manganese dioxide so that if electrical power is lost in the event of a crash, the rescue transmission will not be cut off.

In response, Honeywell spokesman Bill Kircos told Bloomberg via email that while deactivating the ELTs on 787s and checking devices on all models would be “prudent,” it would be premature to “jump to conclusions.” He added that the company expects no financial impact from the AAIB’s recommendation.

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