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Boeing 787 Dreamliner Program in Crisis- Commentary Three

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There was significant new news that broke overnight regarding the ongoing grounding of Boeing’s 787 Dreamliner aircraft.

The New York Times last night reported (paid subscription or free metered view) that even before the grounding decision, the lithium-ion batteries used on this aircraft had experienced multiple problems, some of which were not known by current governmental investigative agencies, but known to Boeing.

All Nippon Airways (ANA), the global launch customer indicated that it replaced 10 batteries in the months before the two recent fire and in-air emergency incidents. According to the Times article, ANA informed Boeing of the replacements as they occurred, but did not report the incidents to regulators because they were not considered a safety issue. ANA further disclosed the extent of previous problems which ranged from too low a charge in five of the replacements, and failure to operate properly in three of these batteries, causing replacement of the battery and the charging system. All the events occurred from May to December of last year, which implies that Boeing had some awareness as to unexplained battery and electrical charging issues. The Times article notes that Boeing had acknowledged that the batteries were not lasting as intended.

Further disclosed was that in a little noticed test conducted in 2010, the U.S. Federal Aviation Agency (FAA) found that the lithium cobalt chemistry selected by Boeing was the most flammable of several different types considered. Boeing had elected to not revisit the design because of weight issues, and instead engineered some safeguards to protect the battery from unexpected fire or overcharging. Also noted was that in 2011, aircraft manufacturer Cessna switched its original lithium ion battery cobalt chemistry on its CJ4 business aircraft to nickel-cadmium, because of a fire incident.

Meanwhile, Japanese regulators on Monday concluded part of their investigation into the battery issues possibly originating from battery supplier GS Yuasa or controlling circuit board producer Kanto Aircraft Instruments, concluding that there were no significant discoveries. The investigation included a week long inspection into battery design and quality control processes. In its reporting of the concluded Japan investigation, The Wall Street Journal noted that privately-held Kanto Aircraft Instruments had never produced a battery monitoring unit until GA Yuasa contracted for the device for the Dreamliner.

Thus, resolution of what is exactly causing the backup electrical power issues of the Dreamliner remain a complex and unanswered, and unless something more dramatic is discovered, it is not likely that the Dreamliner will return to service anytime soon.

As we indicated in our previous commentary, for Boeing itself, every passing day of a grounded aircraft brings new operational, brand image and other monetary implications. Daily media coverage is now viral and finger pointing has now switched toward Boeing itself, and its prior knowledge of battery design concerns. The more these investigations drag on, the more that Boeing’s Dreamliner creditability suffers, along with that of any suppliers targeted in these ongoing investigations.  Any hope of ramping-up the volume delivery schedule is also in jeopardy.  There have been reports that Boeing continues to produce finished 787’s but there will be an obvious challenge as to where to store completed aircraft, and how much retrofit work will need to re-done. These are not Boeing’s sole challenges, but those shared across its global supply chain network.

Boeing’s engineering and product management teams now face some tough decisions, namely whether to allow the current wide-ranging investigations to drag on and add more grounded time to the aircraft, or whether to change the backup electrical design now. Access and synthesis of volumes of information and active business scenario planning are tools of the day.  In either case, Boeing’s senior management team is faced with yet another set of business and product decisions with many supply chain related implications in the months to come.

Bob Ferrari

 

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