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UPDATE 1-Qatar won't take Boeing 787s until engine fault fixed

* CEO says won't take 787s without new modified shaft

* Says Qatar not planning to join oneworld alliance

* Sources said airline would reveal membership next week

(Combines previous separate stories, adds details, quotes)

By Regan Doherty and Rhys Jones

DOHA/LONDON, Oct 2 (Reuters) - Qatar Airways will not take delivery of Boeing's 787 Dreamliner until an engine defect is modified, its chief executive said on Tuesday.

Qatar has placed orders for 60 Dreamliners - 30 firm and an option for 30 more - and selected General Electric Co.'s new-generation GEnx engine for the aircraft.

"The 787 has an engine with new technology. However, there has been a material defect in the engine which now needs replacement and inspection," Al-Baker said after a speech in the Qatari capital Doha.

GE, the world's largest maker of jet engines, said last month it was investigating a second failure of the GEnx jet engine after a Boeing freighter aircraft aborted a takeoff in China.

It was the second incident involving a GEnx engine since July, when an engine on a jet being tested before delivery in South Carolina failed, causing a fire in grass near the runway.

The U.S. National Transportation Safety Board said on Aug. 8 that the July failure was a contained incident of the sort that did not normally pose an immediate safety risk.

"We have informed Boeing that we will not take delivery until the 787s have the new modified shaft," Baker, who has often been outspoken about planemakers Airbus and Boeing and other industry issues, said.

Qatar Airways, established in 1993, has a fleet of 111 aircraft, with 214 planes on order, including options.

ONEWORLD MEMBERSHIP?

Baker also said Qatar was not preparing to join the oneworld alliance after sources close to the airline group said it would next week become the first Gulf carrier to join.

Alliances were formed in the 1990s to help airlines benefit from each other's marketing and routes in the face of tightly-controlled bilateral traffic rights. So far the Gulf carriers have refrained from joining as they build up big networks alone.

"Qatar Airways is not considering joining oneworld at this time," Baker said.

Earlier on Tuesday sources close to the alliance said Qatar Airways would be unveiled as the group's latest member at a news conference in New York planned for Monday.

Baker added he was not going to New York this weekend.

Oneworld, which is the smallest of the three global alliances and includes IAG's British Airways and American Airlines , said it would not comment on speculation about a forthcoming event.

COMBINED ENTITY

Baker said he was in favour of the proposed $45 billion merger of EADS and BAE Systems , arguing a combined entity would make better products.

Airbus parent EADS and BAE Systems are battling to save their tie-up, which would create a European aerospace and defence giant, amid competing government interests.

"It will make them strong," Baker said. "They're coming back together because staying apart was not in their best interest. They can provide better products and customer service together."

Baker said he was content with the Airbus A380 superjumbos after the manufacturer moved to address wing crack problems.

In April, the Gulf carrier deferred delivery of the aircraft, saying it wanted more details on cracks found in a handful of wing components of most aircraft in service.

Qatar, which struck an interairline partnership agreement with short-haul Canadian carrier Porter Airlines in August, is still eyeing Bombardier's Cseries jets.

(Editing by Mark Potter and Helen Massy-Beresford)

((regan.doherty@thomsonreuters.com)(Reuters Messaging: regan.doherty@thomsonreuters.com))

Keywords: QATAR BOEING/DREAMLINER

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