Charleston 787 Dreamliner Accident Is Latest Headache For Boeing

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By Roland Li | July 31, 2012 5:40 AM EST

The Boeing Co. (NYSE:BA), the largest U.S. aerospace manufacturer, faces an investigation by the federal government after another accident involving the engines of its 787 Dreamliner, the latest setback for the company's flagship jet.

Parts of a new 787 engine fell on a runway during a test in Charleston, S.C., on Saturday, sparking a fire and shutting down the airport temporarily, reported local media. Chicago-based Boeing has its East Coast factory nearby. The National Transportation Safety Board, an independent federal agency, is investigating the problem, along with Boeing and General Electric Co. (NYSE: GE), which manufactured the engine. Japan Airlines Co. (Nikkei: 9205) is the only company that currently uses the GE model.

"While the investigation is in its early stages, we are unaware of any operational issue that would present concerns about the continued safe operation of in-service 787s powered by GE engines," Boeing said in a statement. "However, should the investigation determine a need to act, Boeing has the processes in place to take action and will do so appropriately."

The Charleston incident follows moves by Japan's All Nippon Airways (Nikkei: 9202) to ground three of its Dreamliners after discovering corrosion problems with its Rolls Royce-manufactured engines. Boeing said the problems wouldn't affect deliveries. The company has more than 800 of the 787s on order, with a retail price around $200 million. The planes had been delayed around three years due to design and production issues. The Dreamliners seat between 210 and 290 passengers and began commercial service in October 2011.

The 787s are crucial for Boeing's competition with its major rival, EADS NV's (Paris: EAD) Airbus SAS. Airbus' alternative to the 787, the A350 wide body jet, is still under development. It has also experienced delays and large buyers, including Qatar Airways and Emirates, have expressed dissatisfaction with the design.

Airbus announced new orders for the A350-1000 by Cathay Pacific during the Farnborough Air Show in England earlier in July, the first purchases since 2008 for the -1000 model, the biggest version of the A350. But Boeing announced more overall orders during the show.

Shares of Boeing fell 77 cents to $74.74, while shares of EADS were down 0.30 percent to 29.72 euros.

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