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4-Traders Homepage  >  Equities  >  Nyse  >  Boeing Company (The)    BA

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The Boeing Company : Q&A: FAA approval may need rethink, House aviation leader says

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01/24/2013 | 01:48am CEST

U.S. Congressman Rick Larsen stepped into a busy new role this week. As Ranking Member of the House Aviation Subcommittee, the Washington state lawmaker is the top Democrat on the body overseeing the Federal Aviation Administration, which is reviewing problems with Boeing Co's new 787 Dreamliner.

The subcommittee of the House Transportation and Infrastructure Committee, chaired by New Jersey Republican Frank LoBiondo, also has jurisdiction over all aspects of civil aviation - from safety and infrastructure to labor, commerce and international issues.

Larsen's 2nd Congressional District includes the Everett, Washington, factory where Boeing makes all of its planes except the 737, and is home to more than 170 companies that supply parts and systems, with some as small as three people in a garage.

BOEING'S NEW 787 DREAMLINER IS GROUNDED AND UNDER REVIEW BY REGULATORS, INCLUDING THE FAA, AFTER TWO BATTERY FAILURES AND OTHER PROBLEMS. DO YOU THINK THE FAA APPROVAL PROCESS SHOULD BE REEXAMINED IN LIGHT OF THIS?

"Yes, it may be something we could look at in light of the current problems. It's a matter of how. Right now, Congress' job is to let the FAA do its job and do it well.

"I think the FAA was correct in issuing the airworthiness directive and grounding the plane so they could get a full handle on the problem. As we move forward, in Congress we're probably going to look at certification issues as part of the general budget process."

IS THERE A RESOURCE ISSUE FOR THE FAA RIGHT NOW?

"I couldn't tell you if it's a resource issue right now. This is a new airplane using composites and the heavy use of electricity and batteries to store it is new. And so it was certainly appropriate that the FAA issued special conditions for its use.

"Are these problems any worse than other airplanes have? I think they certainly look worse. We don't have the memory of the 777's problems when it started flying and it has been one of the most successful airplanes in Boeing's history. I suspect the future will probably look more like that for the 787, but right now the FAA needs to focus on getting the review done and Boeing needs to focus on fixing it."

HOW LONG COULD THE REVIEW TAKE?

"I don't know. It should take as long as necessary to ensure the traveling public that this is a safe plane to fly. There can't be any shortcuts. Safety has to be first."

IS THE FAA KEEPING UP WITH THE CHALLENGES OF REGULATING MANUFACTURING WITH SHARPLY HIGHER GLOBAL OUTSOURCING?

"The supply chain and logistics chain for a lot of manufacturing has changed over the last several decades. That may be part of the broader review that the FAA is doing" of design, manufacturing and assembly.

"That is something that we need to take a look at. If we go through sequestration in Congress as a way to deal with budgets, it's going to hard for the FAA's ability to do its current job, much less make any changes it has to make to deal with certification issues in the future. That's one more reason why sequestration as currently envisioned isn't really going to work."

IS THERE ENOUGH ROOM BETWEEN REGULATORS AND THE COMPANIES IT REGULATES, SPECIFICALLY BOEING?

"I know there's been criticism out there about past relationships. But I'm confident that now, in this situation that there's plenty of room between the FAA and the Boeing Company. The FAA has been very clear with me that safety is first on this one. And any changes Boeing has to make the FAA will have to sign off on."

WHAT DO YOU THINK OF U.S. AIRLINES' DESIRE FOR A 'NATIONAL AIRLINE POLICY,' THAT WOULD REDUCE REGULATION AND MOVE MORE QUICKLY TOWARD A SATELLITE-BASED AIR TRAFFIC CONTROL SYSTEM, KNOWN AS 'NEXT GEN'?

"Certainly rolling out Next Gen is important to me. I've been briefed on the national airline policy, but look forward to talking more about them before making any decisions on it. The industry is changing, the structure of airline routes is changing because of technology improvements. It's important for us to take a look at what changes need to be made in regulatory structures to help our airlines take advantage of new technologies."

YOU HAVE SAID CONGRESS MUST INVEST IN TRAINING NEW AIR-TRAFFIC CONTROLLERS. ARE YOU SIMILARLY CONCERNED ABOUT A FUTURE SHORTAGE OF PILOTS?

"I'm concerned about both. But in air traffic controllers, not only does Congress need to invest in the next generation air-traffic control system, but it also needs to invest in next generation air-traffic controllers as well. We see that the current controllers are going to retire, so we're going to have a whole new generation of controllers. The first air-traffic control system they deal with will be the next generation, so we need to find a way to create the pipeline for new controllers. The same goes for pilots. There's enough work to go around."

ARE YOU CONCERNED THAT AFTER AIRLINE MERGERS, THE U.S. MAY BE NEARING A POSITION OF HAVING THREE DOMINANT CARRIERS: UNITED-CONTINENTAL, DELTA-NORTHWEST AND NOW POSSIBLY AMERICAN-US AIR?

"That is a fair question to look into - what industry restructuring does to consumers and prices and what role do the smaller carriers can play on quality and price. But Alaska Airlines, which is headquartered in Seattle, is one of the smaller carriers and they still very large, just not as large as the others."

WHAT IS YOUR VIEW ON HOW TO ENSURE THAT SUBSIDIES TO AIRBUS AND BOEING DON'T CREATE AN UNLEVEL PLAYING FIELD?

"There may be a longer-term grander bargain that can address what other countries are doing, too. Canada and Brazil are in the aerospace business, and China and Russia want to be more active. Whatever resolution we come to, my view is let's come to it once."

HOW IMPORTANT IS THE AVIATION INDUSTRY FOR JOBS?

"We like to say the Pacific Northwest is the aerospace capital of the world. There are 170 to 190 separate suppliers ranging from three people in a garage, machining parts, delivered to next tiered supplier to as big as 500 or more people. They could be supplying a Boeing plane or Airbus or Bombardier or Embraer. There's a network of suppliers that serve a worldwide aerospace industry. Aerospace is extremely important for job creation."

(Reporting by Alwyn Scott)

By Alwyn Scott

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