UPDATE 1-U.S. FAA approves Boeing 787 certification plan
* Allows limited test flights of two 787s
* Puts Boeing one step closer to returning 787 to service
* FAA says will be "closely involved" with certification
WASHINGTON, March 12 (Reuters) - The U.S. Federal Aviation Administration on Tuesday approved Boeing Co's plan to certify a redesigned battery system on the 787 Dreamliner and will permit two aircraft limited flights to test it.
The FAA's move puts Boeing one step closer to returning the troubled 787 to the air after the plane was grounded in mid-January by transport authorities worldwide following two incidents involving burning batteries.
"We won't allow the plane to return to service unless we're satisfied that the new design ensures the safety of the aircraft and its passengers," U.S. Transportation Secretary Ray LaHood said in a statement.
Boeing's new battery - which it presented to the FAA in late February - is designed to minimize the chances of a short circuit, insulates the cells within the battery better and adds a new containment and venting system to prevent damage even if the battery catches fire.
The FAA said the new design must pass a series of tests before it is approved and that the agency will be "closely involved" in the certification process.
"Today's approval from the FAA is a critical and welcome milestone toward getting the fleet flying again and continuing to deliver on the promise of the 787," Boeing Chief Executive Jim McNerney said in a statement.
Regulators grounded the 50 Dreamliners in use by airlines on Jan. 16 after lithium-ion batteries burned aboard two planes, banning airlines from flying the 787 and stopping Boeing from delivering them. Although its factories continue to make the 787, Boeing is losing an estimated $50 million a week while the planes are grounded.