* Switches to traditional model used on existing jets
* Move aims to prevent further delay to Airbus A350
* Reflects uncertainty over regulatory response to 787
By Tim Hepher
PARIS, Feb 15 (Reuters) - Airbus has dropped lithium-ion batteries of the type that forced the grounding of Boeing's 787 Dreamliner and will use traditional nickel-cadmium batteries in its crucially important next passenger jet, the A350.
The European planemaker said on Friday it had taken the decision to adopt the batteries used on existing models in order to prevent delays in the A350's entry to service next year, amid uncertainty over the potential fallout of Boeing's problems.
The move came a week after Reuters reported that Airbus was considering such a move to limit the risks surrounding the development of its own $15 billion airliner.
"We want to mature the lithium-ion technology but we are making this decision today to protect the A350's entry-into-service schedule," an Airbus spokeswoman said.
Both groups insist the new battery technology is safe and Airbus took pains to avoid presenting its decision as a swipe against its U.S. rival as they boast a common stand on safety.
But industry executives, insurance companies and safety officials have said questions are piling up over the "maturity" or predictability of lithium-ion technology, as U.S. and Japanese investigators struggle to find the cause of incidents that led to the Boeing's grounding crisis.
These included a fire on board a parked 787 in Boston and an in-flight problem on another plane in Japan.
The A350 is due to enter service in the second half of 2014 compared with an initial target of 2012 when it was launched as Europe's answer to the lightweight 787 Dreamliner.
The industry's fear is that the failure to identify the "root cause" of the burning battery incidents leaves too much uncertainty over whether regulators will certify planes, when they include the powerful but temperamental power packs.
Those anxieties went up another notch this week when the U.N. aviation agency banned the carriage of lithium-ion batteries as cargo in passenger jets.
Analysts say credibility is also at stake after severe delays on the A380 superjumbo and A400M military airlifter. Boeing's 787 also began service in 2011 almost 4 years late.
"I think there is a real interest to try not to have more creeping delays," Leeham Co analyst Scott Hamilton said.
Airbus will still use lithium-ion batteries for a maiden flight in mid-year and early flight trials but switch to traditional batteries in time for certification and delivery.
EARLY INDUSTRIAL USES
Uncertainty over whether Airbus can be sure of certifying the A350 with the new batteries illustrates the scale of the task Boeing faces in persuading regulators to let the 787 fly.
People familiar with the matter say it is ready to implement a fix involving a tough fireproof casing for the battery, but there have been no public signs that regulators would accept this without a deeper understanding of what caused the fire.
Shares in Airbus parent EADS ended flat, while shares in French battery maker Saft fell over 1.4 percent.
Saft developed the lithium-ion battery for the A350 but is also expected to supply the fallback solution as Airbus's main supplier. A spokeswoman said Saft supported Airbus's decision.
Lithium-ion batteries have been in consumer products such as phones and laptops for years but are relatively new to industrial applications such as back-up batteries for electrical systems in jets or energy storage on wind farms.
Their main advantage is that they are lighter and more powerful but they are sensitive to mishandling and can ignite.
Last March, Airbus itself warned that the risks associated with lithium-ion required "the attention of the entire industry," according to a presentation reported by Reuters.
But in a second presentation coinciding with the opening of an A350 assembly plant in October 2012, Airbus said lithium-ion was a "less hazardous material compared to previous batteries".
Cutting out weight and allowing airlines to burn less fuel has been the single-minded goal of aircraft designers for decades, but rarely more so than with the carbon-fibre A350 and 787 as competition for orders reaches fever pitch.
Switching to heavier nickel-cadmium will mean adding 80 kilogrammes of weight to the A350, which would normally have engineers fretting, but concerns over delays took precedence.
Surprisingly, industry sources say the nickel battery may be the same size or even smaller than the lithium one, once the latter's unique electrical protections are stripped out. The actual nickel-cadmium cells are larger than lithium-ion ones.
Boeing's options are seen as more limited because its 787 needs more power to support a greater array of electrical systems - originally one of its futuristic selling points.
Its rival's decision leaves it as the only large commercial jetmaker relying on lithium-ion for main batteries. However, Boeing said it remained upbeat about its well-tested design.
"Boeing is confident in the safety and reliability of lithium-ion batteries," a spokesman said by email. "There's nothing we've learned in the investigations that would lead us to a different decision regarding lithium-ion batteries."