Boeing Balked at FAA Review of 787

U.S. regulators Friday began a comprehensive review of the design and assembly ofBoeing Co.'s BA -2.50%  new 787 jet, a move initially resisted by the company, according to people familiar with the matter.

Regulators reiterated that the aircraft remains safe to fly despite recent electrical and other technical problems.

In an unusual move, Friday's news conference announcing the review was attended by Ray Conner, president of Boeing's commercial-airplane unit, who defended the Dreamliner plane's safety and said Boeing will work with the Federal Aviation Administration on the review. But people familiar with the discussions said Boeing fought unsuccessfully for days to head off or deflect the FAA announcement, arguing it was unwarranted and threatened to undermine investor, customer and passenger confidence in the plane.

Boeing spokesman John Dern said it was inaccurate that Boeing opposed the review. He said Boeing's discussions with officials were about "the scope and structure of the review" and to "ensure that an accurate picture of the 787's performance" would be reflected in Friday's news conference. "Our engagement with the FAA was cooperative and constructive from the outset," he said.

The FAA review doesn't ground any of the Dreamliner planes or require immediate inspections or repairs, and airlines around the globe continued to operate the 50 twin-engine Dreamliners that Boeing has already delivered. But the move poses a significant new challenge for the Chicago-based plane maker at a time when it is trying to increase production and cut costs on the plane after years of expensive delays.

Some safety experts are predicting the review opens the possibility of design or manufacturing changes that could hinder Boeing's production and increase manufacturing costs.

The traveling public, meanwhile, typically maintains confidence in air travel even after major aviation accidents, and the industry has had a strong safety record of late. Still, the issues affecting the 787 have left some seasoned travelers spooked.

Joe Nevin, who runs a ski school in Aspen, Colo., has a ticket for an April 9 Dreamliner flight from Denver to Tokyo on United Airlines, a unit of United Continental Holdings Inc. UAL+2.36% He is concerned about flying the 787 over water for long periods since the cause of some problems haven't been identified yet. "It's got my attention,'' said Mr. Nevin. "You can't solve a problem until you know what it is, and it's not clear to me that they know what it is."

So far, he is still planning on taking his trip. "If United is confident enough, I'd probably go with them," he said. "I don't think they'd be stupid enough to take the plane up if they thought there were problems with it."

The FAA said it plans a "comprehensive review of Boeing 787 critical systems," focusing especially on the "design, manufacture and assembly" of electrical components. The review is something the agency hasn't done in at least three decades: a high-priority regulatory re-examination of a jet that has been approved and fully certified to carry passengers.

Although Boeing fought to forestall the FAA announcement, in the end, newly confirmed FAA Administrator Michael Huerta decided the escalating publicity surrounding a series of electrical and other defects found recently on 787s left him little choice, the knowledgeable people said.

"We are committed to doing this as expeditiously as possible," Mr. Huerta said. The FAA, along with the National Transportation Safety Board, is already investigating the most serious of the recent 787 glitches, a battery fire that occurred on a parked Japan Airlines Co. 9201.TO +0.69% plane in Boston Monday.

"I believe this plane is safe," Mr. Huerta's boss, U.S. Transportation Secretary Ray LaHood, said at the news conference, adding he would be confident about flying on a 787. Mr. LaHood said the review "will look for the root causes of these events," and regulators will take action if required.

Boeing's shares fell 2.5% to $75.16 in 4 p.m. trading Friday on the New York Stock Exchange, leaving them off 3.3% since before Monday's fire.

Like other carriers that fly the Dreamliner, United Airlines said Friday that it will continue to operate its six 787s as scheduled. A spokeswoman for the airline said it isn't increasing its own regular inspections of the planes, but she said "we will fully cooperate" with the review by the FAA and Boeing. United doesn't plan to provide additional information to passengers about the review. The spokeswoman declined to comment about what United has heard recently from passengers about the planes. "We have full confidence in the aircraft," she said.

Boeing CEO Jim McNerney, who hadn't commented publicly since Monday's fire, issued a statement welcoming the FAA's review, saying the company believes it will "underscore our confidence, and the confidence of our customers and the traveling public" in the Dreamliner's safety and reliability.

In addition to checking the safety and reliability of certain systems on the twin-engine 787, which is built primarily from lightweight carbon composite materials, the FAA effectively will reassess Boeing's quality-control safeguards in melding parts delivered by subcontractors around the globe.

The FAA said the review is expected to last several months. It didn't indicate how many of its own experts will participate.

Boeing's Mr. Conner said Friday the Dreamliner successfully went through the "most robust and rigorous certification process in the history of commercial aviation" and passed a follow-up FAA audit in December.

For the FAA, which spent years approving the 787's design as well as details of its production, the latest twist poses some tricky policy and public-relations questions. One of the review's primary goals will be for FAA managers to determine whether agency officials—many from the same part of the FAA— set up appropriate safeguards and assembly-line checks to assure the planes meet all federal safety and reliability standards. Such validation efforts could take months, according to experts, and are bound to find at least some discrepancies and problems.

Separately on Friday, Boeing continued negotiations with its engineers' union, announcing an increase in its salary offer to 23,000 engineers and technical workers, who may end up being central to the FAA's review. Boeing and the Society of Professional Engineering Employees in Aerospace, or Speea, returned to the negotiating table Jan. 9 after a month-long cooling off period, recommended by a federal mediator.

Speea president and Boeing electrical engineer Tom McCarty says the new salary offer "is an improvement" and the company is "moving in the right direction.".Mr. McCarty emphasized the latest proposal would likely prompt a counter proposal to the company, which hasn't yet presented its best and final offer.

Mr. McCarty said in its current form, Boeing's offer—because of its proposed cuts to retirement and medical benefits—would likely see the union seeking a strike authorization vote of its members if Boeing's best and final proposal mirrors its current plan.

Mike Delaney, Boeing's vice president for engineering, declined to comment on whether possible industrial action could affect the FAA review. Union officials have said such action could start as early as Feb. 1.

Mr. Delaney said the company had contingency plans in the event of a work stoppage and indicated it could use managers to perform some of the engineers' functions but gave no further details. Talks with the union are set to resume next week.