Dreamliner’s mishaps disrupt business plans for airlines, parts makers

Kyodo

The worldwide grounding of Boeing Co.’s new 787 Dreamliner has overshadowed the business strategies of the airlines who rushed to introduce the problem-hit jet ahead of their rivals, as well as the Japanese companies supplying parts for it.

The 787, which uses cutting-edge electronic instruments in place of conventional equipment found in older aircraft, has set a new benchmark for fuel efficiency, raising hopes for increased profitability despite soaring fuel costs.

On Friday, however, Boeing said it would not deliver any more 787s until the U.S. Federal Aviation Administration approves measures to address safety concerns generated by the lithium-ion batteries the plane uses. The aircraft has also experienced fuel leaks.

According to All Nippon Airways Co., which flies more 787s than any other carrier, the jet helps it achieve fuel reductions of roughly 17 percent on domestic routes and around 20 percent on international services. This allows ANA to launch routes that would have been unprofitable using jumbo jets.

ANA plans to expand its fleet of 17 Dreamliners to 55 in fiscal 2017, a move it expects to raise profitability by more than ¥10 billion. Japan Airlines Corp., which owns seven Dreamliners, plans to eventually expand its fleet to 45.

Despite the safety concerns, ANA President Shinichiro Ito said there are no plans to change its 787 strategy for the time being.

But aviation analysts say the carriers will eventually have to review their plans if the Dreamliner stays grounded much longer. On Friday, for example, ANA said 68 international and domestic flights would be canceled between Saturday and Monday due to the suspension of 787 operations.

While the root cause of the ANA Dreamliner’s emergency landing Wednesday at Takamatsu Airport in Kagawa Prefecture is still under investigation, concerns are also growing that the grounding will impact the Japanese manufacturers that provide around 35 percent of the plane’s key components.

Among them is GS Yuasa Corp., which provides lithium-ion batteries for all Dreamliners. Investigators have found that the main battery installed in the ANA 787′s electrical room under the cockpit seems to have overheated and emitted smoke, although the passengers reportedly only complained of a “burning smell.”

GS Yuasa’s stock price sank after the emergency landing was linked to its batteries. “Investors will likely refrain from buying GS Yuasa shares until the cause of a series of troubles is identified,” an analyst at a major domestic brokerage said.

Fuji Heavy Industries Ltd. provides Boeing with the center wing box for the 787, and has been looking to boost production capacity to turn out 10 wing boxes a month this year amid an increase in orders.

“If orders from Boeing drop at this point, we will be in trouble. I really hope that won’t happen,” a Fuji Heavy official said.