U.S. regulators are ready to approve Boeing Co.’s proposed battery changes for its 787 Dreamliner and end the plane’s three-month grounding, according to people briefed on the agency’s decision.

The Federal Aviation Administration has agreed that a hardened battery case, added circuitry protections and a system to vent smoke from the aircraft will ensure safety, said the people, who asked not to be identified because they weren’t authorized to speak about the matter. It’s unclear when the agency will announce its decision, the people said.

Deliveries of the 787 have been halted since the FAA’s Jan. 16 grounding order for Boeing’s newest model, which came after two incidents involving lithium-ion batteries that smoldered and emitted fumes. Aviation authorities around the world followed the FAA’s lead.

“Getting the plane back up is very critical,” said Ryota Himeno, an analyst at Barclays Securities Japan Ltd. by phone.

Starting operations after the first U.S. grounding of an entire model in 34 years is key for the Chicago-based planemaker as it tries to double the production of the jet this year to help fill a backlog of about 800 orders.

Boeing spokeswomen Yvonne Leach declined to comment on the FAA’s pending moves.

Flight resumption

Japan’s transport ministry is in its final stage of the 787 probe, said Shigeru Takano, the ministry’s director in charge of air transport safety, at a briefing in Tokyo today. Japan’s home to the largest fleet of Boeing 787s and Kyoto-based GS Yuasa Corp. is the battery manufacturer of the Dreamliner.

Takano declined to comment on the FAA decision. Hiroharu Nakano, a spokesman for Kyoto-based GS Yuasa, also declined to comment.

FAA Administrator Michael Huerta said at a Senate hearing April 16 that Boeing has completed all the tests it agreed to conduct on the redesigned lithium-ion batteries. The power cells start a backup generator and are used when the plane is on the ground.

Battery faults in January caused a fire in a Japan Airlines Co. 787 in Boston and forced an emergency landing by an ANA Holdings Inc. one in Japan.

Boeing shares fell 0.7 percent to $86.12 in New York trading yesterday. ANA, the largest operator of the 787s, rose 1 percent 206 yen in Tokyo today while GS Yuasa gained 1.5 percent to 410 yen.

49 Dreamliners

Boeing, which has delivered 49 Dreamliners so far, said last month safety upgrades to the 787 Dreamliner’s battery systems may allow commercial flights to restart within weeks.

Japan Air said last month the cancellation of 787 flights will cut operating profit by 1.1 billion yen ($11 million).

Boeing has dozens of Dreamliners parked around its factories that have been built and not yet handed over. It’s now starting to assemble the 115th Dreamliner, Leach said. With orders for 840 still to fill, Boeing kept production steady at five jets a month during the grounding, even though deliveries were halted.

Boeing’s own pilots have to first fly each 787 to test its systems, followed by the airlines’ pilots, before each delivery can be made. The FAA began allowing those so-called functional test check flights to resume yesterday, starting with a jet intended for ANA. The Japanese carrier was the first to fly the new model when it entered service in late 2011.

With assistance from Kiyotaka Matsuda in Tokyo. Editors: Bernie Kohn, Anand Krishnamoorthy. To contact the reporters on this story: Alan Levin in Washington at alevin24@bloomberg.net; Susanna Ray in Seattle at sray7@bloomberg.net. To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net. 

Photo Credit: U.S. aviation authorities, unidentified Boein Co. official and members of Japan Transport Safety Board inspect ANA Boeing Co's 787 Dreamliner plane. Issei Kato / Reuters