December 16, 2003


Efficient Boeing 7E7 expected to take wing (Byron Acohido, 12/16/2003, USA TODAY)

Boeing (BA) announced late Tuesday that its board of directors approved moving forward with its first new model in 13 years, the 7E7. [...]

The company's board of directors has given the Commercial Airplanes unit clearance to begin offering the new 7E7 Dreamliner to airlines. Responses will determine whether the project goes forward.

The 7E7, dubbed the Dreamliner, stands out as a case study in risk-aversion. The E literally stands for efficiency. The 7E7's technological advances: wider use of lighter parts and more efficient engines to make it cheaper to operate and thus a less-risky purchase for airlines.

Key partners in Japan, Italy and Texas will assume the financial risk of designing and delivering most of the jet's structure in ready-to-connect modular sections, something Boeing has never tried before. Japan will supply the wings, heretofore considered Boeing's crown-jewel expertise.

By deflecting 50% of the 7E7's estimated $6 billion-to-$10 billion development costs to key suppliers, Boeing aims to break even on the 7E7 faster than any model in history. [...]

Boeing is not expected to announce buyers until sometime next year. Airlines are still struggling to operate profitably. Officials from Germany's Lufthansa and All Nippon Airways of Japan have said they've taken a close look at acquiring the 7E7 as more-efficient replacements for aging midsized jets.

Boeing 7E7: If it flies, will airlines even buy it? (David Bowermaster, 12/14/03, Seattle Times)
Boeing's business case for the 7E7 is to make a plane so efficient that it would nudge airlines to retire their Boeing 767s, Airbus A300s and A310s and replace them with 7E7s rather than A330s.

Airlines today operate 1,439 jets in the 7E7's size category — referred to as the "middle of the market." That market, split with Airbus, probably wouldn't be enough to justify a new jet. So Boeing is counting on hefty growth.

Randy Baseler, Boeing's vice president of marketing, said the company expects the world's airlines to purchase 2,520 small widebodies over the next 20 years.

Boeing could capture the bulk of those sales if cost-obsessed airlines embrace a plane that can burn 20 percent less fuel than the A330-200, currently the best-selling small widebody.

"It depends on what Airbus does," Baseler said. "If they stay with the A330-200, we think we'll have a significant share. But we don't think they'll sit on the A330-200."

Heard some analysts saying today that the thing is so cost efficient it makes the much ballyhooed new Airbus obsolete already.

Posted by Orrin Judd at December 16, 2003 6:15 PM

The 7E7 looks like a pretty decent airplane and it is probably pretty well designed for the new industry paradigm -- more reliance on leisure travel, less business travel, much smaller business travel premiums and more point-to-point flights. Still, I wish they had decided to go forward with the flying wing they were looking at a few years ago rather than staying with incremental change to another tube with wings.

Posted by: David Cohen at December 17, 2003 10:07 AM

Boeing passed on a bigger jumbo. Airbus decided to build the monster (up to 900 passengers) A380. The Guardian reports that: ". . . [All-Nippon Airways]'s corporate planning director, criticised the design of the superjumbo, saying larger aircraft created too many problems at airports: "Already, when I take a ride on a 747, I have to wait a long time to board - it's a crazy stress." He said baggage handling was frequently "chaos" when jumbo jets, which carry more than 560 people on domestic routes in Japan, arrived en masse. Experts said failure in Japan leaves the Toulouse-based manufacturer with an uphill struggle to break even on the A380 . . . The first A380s are due to roll off the production line within three years. . . Airbus has 129 orders for the double-decker aircraft, including deals with Virgin Atlantic and Air France, but says it needs 250 to break even. No American carriers have signed up."

As the trans-Pacific market continues to grow, I think Boeing will probably build the Mach 0.95 Sonic Cruiser.

Posted by: Robert Schwartz at December 17, 2003 9:42 PM