Boeing suffered another huge blow on Wednesday as US and Japanese regulators grounded its 787 Dreamliner until a fire risk linked to the plane's lithium batteries can been resolved.
Japan's two biggest airlines had already taken almost half the global fleet out of service, but the decision by the US Federal Aviation Administration (FAA) means 30 of the world's 50 Dreamliners have now been grounded.
"As a result of an in-flight, Boeing 787 battery incident earlier today in Japan, the FAA will issue an emergency airworthiness directive (AD) to address a potential battery fire risk in the 787 and require operators to temporarily cease operations," the FAA said in a statement.
"Before further flight, operators of US-registered, Boeing 787 aircraft must demonstrate to the Federal Aviation Administration that the batteries are safe," it said.
Boeing CEO Jim McNerney defended the aircraft following the FAA decision, saying: "We are confident the 787 is safe and we stand behind its overall integrity."
McNerney said in a statement that the aircraft giant would cooperate with the FAA and take "every necessary step" to reassure the public and return the planes to service, adding that safety was Boeing's "highest priority."
He said his company "deeply regrets" the impact of recent events on airlines and passengers.
United Airlines, the world's biggest airline and currently the only US airline operating the 787, with six Dreamliners in service, said it would "immediately comply" with the FAA directive and redirect customers.
The FAA action was prompted by a battery incident during an All Nippon Airways flight that resulted in an emergency landing in Japan on Wednesday, following another incident last week on an ANA 787 on the ground in Boston.
"The root cause of these failures is currently under investigation," the FAA said.
"These conditions, if not corrected, could result in damage to critical systems and structures, and the potential for fire in the electrical compartment."
The FAA said it was also alerting the international aviation community so authorities in other countries could take similar action.
Following the FAA decision, Japan's vice transport minister, Hiroshi Kajiyama, said all Dreamliners operating in the country must remain grounded until their batteries are confirmed to be safe.
ANA – the world's first carrier to receive the Dreamliner from Boeing after years of delays – said smoke possibly stemming from a faulty battery forced pilots to land the passenger plane in Takamatsu, southwestern Japan.
The airline said cockpit instruments had detected the smoke inside a forward electrical compartment, and Japanese transport minister Akihiro Ota called it a "serious incident that could have led to a serious accident."
One of the 129 passengers on the Tokyo-bound domestic flight was quoted by broadcaster NHK as saying he "smelled something strange" after take-off and feared the plane was going to crash.
Nobody was seriously injured however when the passengers and eight crew members evacuated via emergency chutes.
ANA and its rival Japan Airlines (JAL) – among Boeing's biggest customers for the Dreamliner – had earlier said they would ground their entire 787 fleets through Thursday at least, pending safety checks.
ANA has 17 Dreamliners and JAL has seven – almost half the 50 planes currently in operation worldwide. Boeing has orders for nearly 850.
The Dreamliner is considered an aviation milestone with its extensive use of lightweight composite materials and electronics, instead of aluminum and hydraulics, and airlines have embraced the plane as a way to cut fuel costs.
But a week of mishaps leading up to the forced landing in Japan has made for unwelcome headlines for Boeing.
Until now, the rash of problems had not dented investor confidence in the aerospace giant. From the first incident this year, on January 7, until the market closed Tuesday, Boeing's share value had climbed 0.6%.
But on Wednesday, even before the FAA announcement, Boeing shares plunged 3.4% in New York, dragging down the Dow Jones Industrial Average.
"The one thing that must send shudders through Boeing Co. management and its board is that the 787 Dreamliner could be taken out of service because of a series of accidents," said Douglas McIntyre of 24/7WallSt.com.
"Boeing engineers, aircraft experts and several Wall Street analysts have defended problems with the jet as routine for a new airplane. The power of those defenses is now over," he added in a research note.