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Expect Dreamliner delays, Boeing tells airlines

By Brenda Goh and Bill Rigby

LONDON/SEATTLE (Reuters) - Boeing Co told two European airlines their deliveries of 787 Dreamliner jets would be delayed, underlining the uncertainty surrounding the future of the plane and the mounting costs related to its grounding.

The new lightweight, carbon-composite aircraft were grounded worldwide on January 16 after a series of battery incidents, including a fire on-board a parked 787 in Boston and an in-flight problem on a plane in Japan.

Since then, conditions have grown crowded at Paine Field, the airport next to Boeing's Everett, Washington widebody plant where planes being prepared for delivery are parked.

Some 10 apparently finished and painted 787s flanked the runway on Thursday, compared with six on January 17.

Thomson Airways, owned by Britain's TUI Travel, told Reuters that delivery of its first Dreamliner, originally scheduled for the end of February, had been "moved out of the month" and it had not been given a new delivery date. There are two Thomson planes among the 10 idling at Paine Field.

Norwegian Air Shuttle, meanwhile, said it had been notified by Boeing that its delivery schedule was at risk because of an investigation by the U.S. National Transportation Safety Board into the aircraft. The extent of the possible delay was not yet known.

Thomson launched an advertising campaign in Britain in April last year for its new fleet of Dreamliners, which it said represented the "future of long-haul travel." It planned to start using the planes in May.

"Boeing is doing everything it can to resolve the situation. We appreciate that there are many customers who are looking forward to flying on the Dreamliner, but unfortunately these circumstances are out of our control," Thomson said.

Both airlines said that they were making backup plans, with the Nordic carrier saying that it would lease aircraft if the 787 was not delivered in time for its long-haul service.

Norwegian was scheduled to receive the first of eight Dreamliners in April and the company has already sold deeply discounted tickets for its first overseas flights, as it aims to take on legacy carriers.

Thomson said its contingency plans included using alternative aircraft for its long-haul flights to Mexico and Florida if delivery was delayed beyond the end of March.

Separately British Airways, owned by International Airlines Group, said it was in discussions with Boeing but that the first of its 787 planes was still scheduled to be delivered in May. Virgin Atlantic said delivery of its 16 Dreamliners starting in summer 2014 was unchanged.

RALLY IN JAPAN

Boeing shares fell 1 percent Friday to $76.65, having closed higher for five straight trading days. Analysts generally believe that investors have been too focused on the short-term question of fixing the plane's battery system and missing the greater prospect of long-term delays.

The one glimmer of hope was news late Thursday that the U.S. Federal Aviation Administration would let Boeing conduct test flights of the 787 to study the battery question.

Shares of All Nippon Airways Co Ltd and Japan Airlines Co Ltd rose sharply on the news, outperforming the broader market. The two Japanese airlines operate nearly half of the 50 Dreamliners in service.

ANA said last week that it had lost around $15 million in revenue as a result of the Dreamliner grounding, while JAL said the idling of the passenger jets would shave $7.6 million from its operating profit in the year to end-March.

Boeing has a product liability insurance policy with groundings coverage that would potentially help it pay compensation claims from airlines, though the planemaker's insurer has said it was too soon to say for sure.

AIRBUS RECONSIDERS

Given all of the headaches facing the 787, Europe's Airbus is considering whether to drop lithium-ion batteries and switch back to traditional ones for its new A350, several people familiar with the matter said.

The move comes amid a wider rethinking in the aerospace industry on whether the powerful but delicate backup energy systems are technically "mature," they said.

The NTSB said Thursday it had identified where the fire broke out on the 787 in Boston, but not the cause, and referred to a possibly long investigation ahead.

A spokesman for Airbus said the company would evaluate the outcome of the U.S. battery investigation: "Let's not get ahead of ourselves. There are no conclusions by the NTSB yet and the investigation is still ongoing."

(Additional reporting by Gwladys Fouche in Oslo, Rhys Jones in London, Dominic Lau in Tokyo and Tim Hepher in Paris; Writing by Ben Berkowitz; Editing by Kate Holton, Mike Nesbit and Steve Orlofsky)

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