* Republicans say FAA has flexibility to make other cuts
* Huerta says government 'sequester' gives FAA few options
* FAA 'working around the clock' on Boeing battery probe
By Doug Palmer
WASHINGTON, Feb 27 (Reuters) - The U.S. Federal Aviation Administration will have to begin furloughing air traffic controllers in early April because of a looming $627 million in automatic spending cuts, the head of the agency said on Wednesday, while Republican lawmakers argued there were other ways to handle the budget crunch.
"We're looking at all options to reduce costs. We're looking at a hiring freeze, at cutting contracts and travel and other items not related to day-to-day operations," FAA administrator Michael Huerta told the U.S. House of Representatives Transportation Committee.
"But to reach the large figure we need to cut, we have little choice but to make up the rest through furloughing employees," Huerta said, referring to the automatic federal spending cuts known as "sequestration" due to take effect on Friday.
His testimony echoed a warning last week by Transportation Secretary Ray LaHood, who told White House reporters the automatic cuts would lead to delayed flights, shuttered control towers and irate passengers from coast to coast.
Republicans took issue at the hearing with that grim scenario, telling Huerta it should be possible to find some $627 million in savings from the agency's $16 billion budget without having to furlough most of its 47,000 employees for one to two days every two weeks.
"Looking at the budget, there are places you can shift money around and make the tough choices you need to make," said House Transportation Committee Chairman Bill Shuster, a Pennsylvania Republican. "This is a time we really need you to sharpen the pencil of the FAA."
The plan outlined by LaHood last week includes eliminating the midnight shift in more than 60 control towers and closing more than 100 towers at smaller airports.
Huerta said the agency was trying to reduce furloughs by focusing first on a hiring freeze and then looking at its various contracts, the largest of which covers the FAA's telecommunications infrastructure and is important to maintaining the operation of the system.
"Under the sequester, our flexibility is very limited because we must cut proportionally from all affected accounts. We can't move money around and we have limited flexibility to choose what it is that we are able to cut," he said.
Representative Sam Graves, a Missouri Republican, said he found it hard to believe that reducing FAA to spending levels of just a few years ago could have such a dramatic effect.
"The sky isn't falling. We're not going to have more meteors hit because of sequestration. I don't understand why the administration continues to take this attitude that the world is absolutely falling apart as a result of this," Graves said.
Separately, Huerta told the panel that the FAA was "working around the clock" to get to the root of battery problems that prompted it last month to ground Boeing's 787 Dreamliner.
He said the FAA was carefully examining the company's proposals to address the problems and "won't allow the 787 to return to commercial service until we're confident that any proposed solution has addressed battery failure risk."
Huerta said he expects to receive an internal report next week on Boeing's proposed short-term fixes to the battery problems, and also said the U.S. aircraft manufacturer has not asked the agency for permission to conduct more flight tests on the 787 to check out its proposed fixes.