Welcome to Boeing’s Dreamliner Nightmare

A near worst-case scenario has come to pass for Boeing (NYSE:BA). The Federal Aviation Administration announced on Wednesday evening that the risk of fire because of battery issues on the 787 Dreamliner requires grounding of the entire U.S.-registered fleet.

How bad is it?

The FAA’s decision to issue an emergency airworthiness directive came immediately after an in-flight battery issue forced the grounding of a 787 flight in Japan.

“The AD is prompted by this second incident involving a lithium ion battery. The battery failures resulted in release of flammable electrolytes, heat damage, and smoke on two Model 787 airplanes. The root cause of these failures is currently under investigation. These conditions, if not corrected, could result in damage to critical systems and structures, and the potential for fire in the electrical compartment,” the FAA said in a statement.

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The regulator’s decision comes just a few days after it announced a formal review of the aircraft, and echoes the decision of other nations to ground their fleets of 787 Dreamliners…