(Reuters) – British regulators investigating the fire on a Boeing 787 Dreamliner identified the plane’s emergency locator beacon as a likely source of the blaze and said on Thursday it should be switched off, spurring a rally in shares from relieved investors.

Boeing said the beacon could be removed in about an hour from its newest model plane, which was grounded for more than three months earlier this year due to a battery issue that regulators said was unrelated to the fire on an Ethiopian Airlines jet in London a week ago.

The U.S. Federal Aviation Administration regulations do not require the transmitter, but some other nations do, the plane maker said in a statement backing the British report.

A European regulatory official said the jets could fly with the locator beacons temporarily de-activated, despite regulations mandating them in most commercial situations.

Analysts cautioned that the British report still left open the question of how the fire actually started.

“This is not really what you call a conclusive answer,” said Richard Aboulafia, an aviation consultant with the Teal Group. “There’s nothing about this finding that indicates a lack of safety with the plane, but on the other hand there’s no conclusive proof that a system unrelated to the plane is to blame.

Shares in Boeing rose 2.6 percent to $107.40, closing in on the all-time high of $108.15, set just before the fire was reported.

The beacons, made by U.S. conglomerate Honeywell, are positioned in the upper rear part of the advanced jets, and send a signal that leads rescuers to downed aircraft. They are powered by non-rechargeable, lithium-manganese batteries.

Britain’s Air Accidents Investigation Branch (AAIB) is leading the investigation into a blaze that broke out on a parked Ethiopian Airlines jet at London’s Heathrow airport last Friday. Its report, published on Thursday, also said aviation regulators should conduct a safety review of lithium-powered emergency locator beacons in all aircraft types.

The AAIB report said the fire occurred in the upper portion of the Dreamliner’s rear fuselage where the ELT devices are located. “There are no other aircraft systems in this vicinity which, with the aircraft unpowered, contain stored energy capable of initiating a fire in the area of head damage,” it said.

The ELT history indicated the event was rare, and the fire happened while the aircraft was unoccupied, it said.

“However, large transport aircraft do not typically carry the means of fire detection or suppression in the space above the cabin ceiling and had this event occurred in flight it could pose a significant safety concern,” it added.

Boeing said it supported the AAIB’s recommendations and reiterated its confidence in the Dreamliner’s safety. It said it stood by the plane’s “overall integrity”.

The AAIB recommended that the U.S. Federal Aviation Administration ensure the power was turned off in all Honeywell-made ELT systems in the 60-plus Dreamliners currently in commercial service. A source close to the probe said this could mean removing the ELT’s batteries.

In Washington, the U.S. Federal Aviation Administration had no immediate comment.

Honeywell said it did not expect any financial impact from the incident.

The battery linked to the London fire is made by New York-based Ultralife Corp, according to an industry source. Ultralife did not return calls or emails seeking comment.

AIRWORTHINESS

The AAIB said Honeywell had produced some 6000 ELTs of the same design, which are fitted to a wide range of aircraft.

“Detailed examination of the ELT has shown some indications of disruption to the battery cells. It is not clear however, whether the combustion in the area of the ELT was initiated by a release of energy within the batteries or by an external mechanism such as an electrical short,” AAIB said in the report.

“In the case of an electrical short, the same batteries could provide the energy for an ignition and suffer damage in the subsequent fire.”

Loren Thompson, a U.S.-based analyst and consultant with close ties to industry, said the UK recommendation did not call into question the airworthiness of the 787, which offered some good news for Boeing.

“The Honeywell device is simply a beacon for locating the aircraft in an accident, so it has no bearing on the flight worthiness of the plane,” Thompson said.

Despite early concerns about the composite nature of the plane, high-tech electronics were turning out to be a bigger headache for the Dreamliner, Thompson said.

The AAIB said a detailed examination of the ELT and other possible causes of the fire would continue and that it would issue further updates when appropriate.

Honeywell shares were trading 72 cents higher at $83.17 around midday, near a year-high, while shares in Ultralife Corp were up 1 cent from Wednesday’s close of $3.82.

SOURCE REUTERS. Photo: M. van Leeuwen Z.A.P.P.

EXTRA:

A proposal by UK investigators to de-activate emergency beacons following a fire in a parked Boeing 787 Dreamliner should not lead to an immediate second grounding of the jet, a European regulatory source said on Thursday.

Although regulations in Europe and several other jurisdictions require a working Emergency Locator Transmitter (ELT) on commercial flights with more than 19 passengers, the 787 can continue to fly while the precautionary measure to unplug the devices from their battery is in place, he said.

In Washington, the U.S. Federal Aviation Administration had no immediate comment.