Boeing CEO urges FAA to return 787 to service, delays continue

WASHINGTON Fri Mar 29, 2013 1:26am GMT

Boeing CEO Jim McNerney waits to be introduced to speak, in front of a Boeing 787 Dreamliner under construction at the Boeing facility in Everett, Washington in this February 17, 2012, file photo. Boeing Co has high confidence that the proposed fix for the lithium-ion batteries on its grounded 787 passenger jet will work, Chief Executive Jim McNerney said on March 28, 2013. REUTERS/Jason Reed/Files

Boeing CEO Jim McNerney waits to be introduced to speak, in front of a Boeing 787 Dreamliner under construction at the Boeing facility in Everett, Washington in this February 17, 2012, file photo. Boeing Co has high confidence that the proposed fix for the lithium-ion batteries on its grounded 787 passenger jet will work, Chief Executive Jim McNerney said on March 28, 2013.

Credit: Reuters/Jason Reed/Files

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WASHINGTON (Reuters) - - Boeing Co (BA.N) Chief Executive Jim McNerney on Thursday urged regulators reviewing battery problems on the company's grounded 787 passenger jet to let the plane back into service, saying he was confident the redesigned battery was safe.

He would not specify when he expected the jet to be flying customers again other than saying "sooner rather than later."

Separately, the airplane leasing company that is the world's biggest buyer of 787s said it expects its first delivery of the high-tech jet to be delayed to summer from spring, but that getting the plane restored to service will "go quickly."

The Federal Aviation Administration and its administrator Michael Huerta "have been champs here," McNerney told a U.S. Chamber of Commerce aviation summit in Washington, D.C. on Thursday. (For event video, click: link.reuters.com/juf96t )

"They have put us through our paces and they have America's best interests in mind. They have the safety of the public in mind as I hope we do, which I think at this point means let's get this thing back into service and get on with it."

Regulators worldwide banned flight of the 787 after lithium-ion batteries overheated on two of the aircraft in January. The grounding is costing Boeing an estimated $50 million a week in lost income and compensation payments to airlines.

McNerney said the grounding has been a "frustrating experience," but he had high confidence that the proposed fix for the battery system will work. Boeing is now running test flights to prove the safety of the system, which includes a steel box to prevent fire and contain explosion. McNerney said he expected the plane to be in service "sooner rather than later," though he was not more specific.

Shares of Boeing fell 0.5 percent to $85.76 in morning trading. The stock is up 16 percent since the plane was grounded, most of which came over the last month as the 787 moved closer to flying again.

Meanwhile, speaking in the sidelines of the conference, the president of Boeing's biggest 787 customer said he expects approving and installing a fix for the battery will "go quickly."

"I think it is going to go quickly now," said Fred Cromer, president of International Lease Finance Corporation, which has ordered 74 Boeing 787s. "The FAA is interested in getting the plane back in the air as soon as possible."

Boeing and the FAA have "a very good partnership," he said, and are working to make sure the fix "is a solution that all sides agree is the right thing to do."

AIG (AIG.N) unit ILFC is due to receive its first five 787s this year. Cromer said there was no formal word from Boeing about when the first of the jets would be delivered, but that the schedule had shifted to summer from spring. The first jet is leased to Norwegian Air Shuttle (NWC.OL), he said.

McNerney said recent corporate changes at Airbus parent EADS EAD.PA would make the European competitor a "stronger company."

"Airbus can figure out for themselves what they want to be, but I think the model does move a little closer towards -- I think the word (EADS chief executive) Tom (Enders) uses is -- a normal company. I know that has a special meaning in Germany, but I think that will create a stronger competitor, which I think is good for the industry."

EADS shareholders on Wednesday approved sweeping changes in control that the company says will prevent interference, despite coinciding with a rise in European state shareholdings triggered by Germany's decision to buy a stake from carmaker Daimler <DAIGn.

(Reporting by Alwyn Scott; Editing by Tim Hepher, Ben Berkowitz and David Gregorio)

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