Boeing Grounds Next-Gen 787

Boeing Co (BA.N) halted test flights of its long-delayed 787 Dreamliner on Wednesday, a day after smoke in the cockpit forced an emergency landing in Texas.

"We have decided to not fly the other airplanes until we better understand the incident," said Boeing spokeswoman Loretta Gunter. "Whether this lasts all day or shorter or longer remains to be seen. The teams will focus on ground test objectives in the meantime."

The incident, which involved a runway evacuation of those on board the flight, knocked shares 3.4 percent lower to $66.90 in early trade on the New York Stock Exchange as investors pondered the likelihood of another delay to the program, which is already nearly three years behind schedule.

The high-profile incident occurred during final approach to Laredo, Texas, on a routine test flight from Yuma, Arizona. It was the first of its kind for the 787 test program. Gunter said all 42 people aboard evacuated safely down emergency chutes at the Laredo airport.

Boeing said it would take time to determine what caused the cabin smoke.

The 787, a light-weight, fuel-efficient airplane, has generated impressive orders but has also been dogged by engineering, labor and supply chain problems. Boeing has not said if Tuesday's incident would affect its plans to deliver a Dreamliner to its first customer, Japan's All Nippon Airways (9202.T), in the first quarter of 2011.

In recent weeks, there was sporadic talk by industry sources of more delays. Alex Hamilton, managing director at EarlyBird Capital, said the latest issue could force another delay.

"I would think that now you have to check everything," he said. "You've got to isolate the problem and try to figure out what it was."

Hamilton said another delay in the first delivery of the aircraft would not shock the market as much as snags for the 787 production schedule. Boeing gets paid for airplanes at delivery.

"Even if they get initial deliveries out, are they going to have glitches going forward?" he said. "Are they going to smoothly be able to get up to 10 a month? I think that's definitely in question."


The Federal Aviation Administration (FAA) is looking into the incident in which a crew member sustained a minor injury.

The National Transportation Safety Board (NTSB) said it also would monitor the situation. The accident investigation agency did not send any experts to the scene.

Gunter said the wide-body was loaded with technical gear for conducting flight tests. On Tuesday, the crew was monitoring a system that delivers nitrogen gas to fuel tanks to reduce any chance that vapors could ignite.

NTSB investigators believe a fuel tank explosion in 1996 brought down a Boeing jumbo jet, TWA Flight 800, that was about 11 minutes into its flight over the Atlantic Ocean after taking off from New York's John F. Kennedy International Airport.

Gunter disputed some reports that the plane lost power during the emergency. Data from the incident would be evaluated at Boeing facilities in Seattle.

"This will take some time to accomplish," she said.

Smoke can be caused by a variety of factors, including wiring, lighting, other electronics or aircraft systems.

The plane involved in Tuesday's incident is tagged ZA002 and is one of six 787 test aircraft.

Boeing said it had no reason to suspect that the aircraft's engines manufactured by Rolls-Royce Group Plc (RR.L) had anything to do with the incident.

Rolls is trying to contain safety questions and allay investor concern about the violent failure of a different Trent-series engine on a Qantas (QAN.AX) Airbus A380 last week. The plane, carrying 459 passengers and crew, landed safely in Singapore, and Qantas grounded its four-engine superjumbo fleet for checks.

Boeing is also testing two Dreamliners equipped with engines made by General Electric Co (GE.N).

Boeing has orders for about 850 Dreamliners, an unprecedented number for a plane still in development.

The company said last month that that the plane handles well and it was "extremely satisfied" with flight tests. (Reporting by John Crawley and Kyle Peterson; Editing by Maureen Bavdek)