The Federal Aviation Administration (FAA) formally lifted the grounding of Boeing’s 787 Dreamliner fleet, effective Friday, ending the embarrassing and costly episode after 14 weeks and two days.
The FAA estimates the cost to airlines of modifying each jet with two of Boeing’s beefed-up batteries, containment boxes and venting tubes at $464,678.
For United, the sole U.S. operator of the jet with six 787s in service, that’s a total modification cost of $2.8 million.
However, the directive notes this cost “may be covered under warranty” from Boeing. The jet-maker is very likely to pick up this entire cost for all its customers.
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At just over $23 million for all 50 jets in service worldwide, that’s a small fraction of the cost to the airlines from lost revenue while their planes were grounded.
In a quarterly earnings teleconference with analysts Wednesday, Boeing CEO Jim McNerney said “there are no contractual obligations” to compensate airlines for that lost revenue.
“But having said that, there are a few places where we’ll work with our customers,” McNerney added.
Rather than cash, that privately negotiated compensation may take the form of price breaks on future maintenance costs or jet purchases.
United took a smaller hit than some other carriers, since it was able to substitute different aircraft from its fleet and did not have to cancel any routes.
The airline’s lost revenue was only about $11 million, Chief Financial Officer John Rainey said on a quarterly earnings call with analysts Thursday.
The 787s were grounded Jan. 16 after two battery-overheating incidents: a battery fire on an empty 787 parked at the gate at Boston airport, then a smoldering battery on a flight in Japan that forced an emergency landing.
The FAA directive notes that though the root causes of both incidents have not yet been established, Boeing’s fix for the battery system — which the agency reviewed, then approved April 19 — “considered all potential causal factors of the two recent battery incidents.”
The FAA said the directive will “allow the aircraft to return to service as soon as possible,” once Boeing’s battery fix is installed. Still, it will be weeks before full service is resumed.
In addition to carrying out the modifications, which take about five days per airplane, airlines must reposition aircraft, refresh crew training, fly some check flights, then reactivate and sell tickets for routes that have been suspended, including Seattle-Tokyo.
It will be at least June before all 50 jets already delivered are back in scheduled service and the three-month backlog of undelivered 787s sitting in Everett is cleared.
Dominic Gates: (206) 464-2963 or email@example.com