Boeing, hit with $6.6 million FAA fine, faces much bigger 787 repair bill - sources
By Eric M. Johnson and David Shepardson
SEATTLE / WASHINGTON (Reuters) - Boeing Co will pay U.S. regulators $ 6.6 million as part of an agreement on quality and safety violations dating back years. This is a setback that arises when Boeing wrestles with repairs to faulty 787 Dreamliner jets that could dwarf the cost of the federal fine.
Boeing is beginning careful repairs and forensic inspections to fix structural integrity flaws embedded deep in at least 88 parked 787s built in the last year or so, a third industry source said.
The inspections and retrofits could take weeks or even up to a month per aircraft and would likely cost hundreds of millions, if not billions of dollars, depending on the number of aircraft involved and defects, the person said.
The Federal Aviation Administration said Boeing agreed to pay fines of $ 6.6 million after the aviation authority said it violated a 2015 security agreement.
The fines include $ 5.4 million for failing to comply with the agreement in which Boeing pledged to change its internal processes to improve and prioritize regulatory compliance, and $ 1.21 million for the Resolution of two pending FAA enforcement cases.
"Boeing has not met all of its obligations under the settlement agreement and the FAA is holding Boeing accountable by imposing additional penalties," FAA Administrator Steve Dickson said in a statement. Boeing, which paid $ 12 million in 2015 as part of the settlement, didn't immediately comment.
Boeing engineers are working to determine the scope of the inspections, including whether jets can be used as is without compromising safety, two people said. Boeing hasn't told airlines how many jets are affected, another person said.
The FAA has investigated accidental cases, left debris in finished aircraft, and managers putting pressure on employees performing security checks for the FAA said people familiar with the procedure.
For example, in August 2020, Boeing reported to the FAA about the flaw associated with structural folds in the inner fuselage skin, where carbon composite barrels that make up the aircraft's light body are fused together.
However, the defect went unnoticed for months or more as computerized safeguards so that data looking for quality defects weren't programmed to look for loopholes, according to a third-industry source.
The 787 production problems have halted shipments of the jet since late October and blocked a source of much-needed cash for Boeing.
The fuel-efficient 787 was a huge hit with airlines ordering 1,882 of the advanced double-aisle jets valued at nearly $ 150 billion (£ 74.7 billion) at list prices.
However, the advanced production process and extensive global supply chain created problems over the years.
According to two people familiar with the matter, in February Boeing had fixed the 787 production process that was causing the wrinkle bug.
However, the planes rolled off the assembly line for at least a year, and continued after the error was discovered in August 2020.
"It is difficult to find a final solution that will be accepted by aviation authorities and all future companies," John Plueger, CEO of Boeing customer Air Lease Corp., told analysts at an earnings call on February 22nd. "I don't think we're still there." . "
Boeing has been working on the fuselage issue and two other potentially dangerous defects that have occurred since 2019 when plans to consolidate the final assembly of the 787 in South Carolina began next month at a greatly reduced rate of 5,787 per month.
A senior source in the supply chain said it had to cut rates again.
Boeing announced last month that it would resume handing over a small number of 787 customers later this quarter.
There is an ambitious internal plan to ship 100 of the jets this year, one person said. According to analysts, shipments are not expected to recover to 2019 levels until at least 2024.
'OPERATION ON THE OPEN HEART'
Before a jet is shipped, it must undergo invasive inspections and costly repairs.
First of all, the technicians have to pull out the passenger seats, open the floor paneling and use special tools to measure whether there are defects that are invisible to the naked eye, according to three people with direct knowledge of the process.
The repair work already being done at Boeing's factories in Everett, Washington and North Charleston, South Carolina, is even more difficult.
In the jet's gut, technicians must remove several specialty fasteners on either side of the inner hull skin and then install newly made "washers" that fill in the gaps and remove the structural indentations. The workers then replace all the fasteners, repaint and reinstall the interior, they said.
"It's like open heart surgery," said one of the people. "They may be upgrading the fleet for several years."
(Reporting by Eric M. Johnson in Seattle; additional reporting by Tim Hepher in Paris, David Shepardson in Washington and Tracy Rucinski in Chicago; editing by Nick Zieminski)
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