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WASHINGTON (Reuters) - Investigators are looking into whether the fire on a Boeing 787 Dreamliner in London last week was caused by the battery of an emergency locator transmitter built by Honeywell International Inc (HON.N), according to a source familiar with the probe.
Passengers and investors appeared to take the news in stride, as airlines continued to fly the plane on Monday and Boeing Co (BA.N) shares regained most of what they lost on Friday on news of the fire on a parked 787 at Heathrow airport. Boeing shares closed up 3.7 percent at $105.66.
Honeywell said it had joined the investigation but declined to discuss details beyond saying it had no previous experience of difficulties with this type of transmitter.
Some analysts voiced concern about the impact of another technology problem with the new, high-tech airliner.
The overheating in January of two battery packs that provide backup power to the plane caused regulators to ground the plane for three months and caused fleet-wide retrofits and delivery delays.
"Unless the company can say for sure that the incident is isolated to this particular aircraft, it's not welcome news," said Richard Aboulafia, an aviation consultant with the Virginia-based Teal Group.
"The one systematic problem to plague the Dreamliner is that so many of its technologies are new that it is very difficult for the regulators to fully grasp all the changes," he said.
Boeing only resumed deliveries of the planes in May after one of the plane's lithium-ion batteries caught fire and another overheated, requiring a redesign of the battery system and the retrofitting of more than 50 planes.
Britain's Air Accident Investigations Branch (AAIB), which is leading the probe into the blaze on the Ethiopian Airlines ETHA.UL jet, could take days if not weeks to determine the cause, although a source familiar with the investigation said an initial report could emerge this week.
Investigators are studying an emergency locator transmitter, or ELT, which is positioned in the upper rear part of the new airliner and sends a signal that leads rescuers to downed aircraft, said the source, who was not authorized to speak on the record.
Another source identified Ultralife Corp (ULBI.O) as the supplier of the battery that powers the Honeywell ELT. Newark, New York-based Ultralife was not immediately available for comment.
U.S. aviation and safety officials said it was the first time they could recall such a transmitter being investigated as the possible cause of an airplane fire.
The emergency transmitter is powered by a non-rechargeable lithium-manganese battery. The fact that it is not powered by a lithium-ion battery could allay concerns about a re-occurrence of problems that caused the earlier grounding.
Lithium-manganese batteries can be found in some flashlights, digital cameras and military applications.
Honeywell on Monday said its ELTs have been Federal Aviation Administration certified since 2005, are in use in numerous types of aircraft and "we've not seen nor experienced a single reported issue on this product-line."
The company said it is participating in the investigation and that it was too early to draw conclusions about the cause of the fire, which left visible scorch marks on the outer skin of the plane. The fire occurred in an area where galley equipment such as water boilers and heaters also are located.
"It's far too premature to speculate on the cause, or draw conclusions," said Honeywell spokesman Nathan Drevna.
Honeywell said it had sent technical experts to London to assist with the investigation and would continue to work closely with Boeing and the U.S. National Transportation Safety Board.
Boeing declined to comment, or to identify the manufacturer of the battery that powers the transmitter.
An NTSB representative said the agency would not provide updates since the investigation was being led by British authorities.
Boeing shares rose on Monday as concerns waned about another fleetwide grounding. The 3.7 percent gain followed Friday's 4.7 percent tumble on news of the fire, knocking $3.8 billion off the company's market value.
Honeywell shares edged down slightly on Monday, closing off seven cents at $82.30.
Analysts remained cautious.
"Anything that's electronic in nature is more concerning than ... some kind of human error," said Jason Gursky, an analyst at Citigroup in San Francisco.
"The most important thing to keep in mind from an impact perspective is whether this is a systemic issue, or bad assembly, or a bad part, or somebody left the coffee pot on," said Gursky
The Heathrow fire has also has raised questions about the cost and method to be used in repairing the carbon fiber-reinforced skin of the aircraft.
Britain's AAIB on Saturday said it found no evidence the fire was caused by the 787s lithium-ion batteries that were implicated in the grounding earlier this year.
A 25-strong team of experts, including inspectors from the AAIB and the NTSB are investigating the damaged Dreamliner in a hangar at Heathrow airport, some 15 miles west of central London. The FAA and Boeing also are helping in the investigation.
A source close to Boeing said the company had officials "on the ground" at Heathrow but that the AAIB-led team were "operating on their own timescale" and had not provided details of when any further public statements would be made.
Airlines, including Ethiopian Airlines, Britain's Thomson Airways TT.L, U.S. carrier United Continental (UAL.N), and Poland's LOT LOT.UL, said they would continue to fly their Dreamliners, while others, such as Virgin Atlantic VA.UL said they would stick to their plans to buy the aircraft.
"Personally I'd fly on a Dreamliner tomorrow - I don't think it's a problem for the whole fleet like the battery issue clearly was," said Howard Wheeldon, an aerospace analyst at Wheeldon Strategic Advisory.
"I'd expect the AAIB to know what caused the fire by the end of this week but the question for Boeing and Ethiopian Airlines is 'is the plane repairable'?"
Reporting by Andrea Shalal-Esa in Washington, Alwyn Scott in Seattle, Deepa Seetharaman in Detroit, Bijoy Koyitty in Bangalore, Nivedita Bhattacharjee in Chicago; Rhys Jones in London; Editing by Gerald E. McCormick and Tim Dobbyn