Hot off the wire...but not nearly as definite as VH-BZF made it sound...
Boeing Might Drop 747X in Favor of Fast New Plane, Analysts Say
By Peter Robison
Seattle, March 23 (Bloomberg) -- Boeing Co. may drop a proposed larger version of its 747 jumbo jetliner in favor of developing a new mid-sized plane that would fly at close to the speed of sound, analysts said.
The decision would leave the market for planes seating more than 500 people to Airbus Industrie, which has won 62 orders for its A380 ``superjumbo'' from customers including Singapore Airlines Ltd. and FedEx Corp.
``Given the decent odds of a new plane launch potentially two years from now, we expect the 747X is dead,'' Morgan Stanley Dean Witter analyst Heidi Wood said in a research note.
Boeing said it remains committed to the 747X, which would cost about $4 billion to develop and add about 100 seats to its 416-seat 747. The plane doesn't have any orders yet.
``We see a robust market for the 747X,'' said Susan Bradley, a Boeing spokeswoman. ``We're pushing forward with both.''
Boeing has said it's updating the 747 rather than building an all-new plane because it doubts many airlines want a plane as large as the 550-seat A380. Boeing officials have said travelers would prefer to fly on smaller, faster planes able to get them to their destinations more quickly.
The company hasn't given many details about the new plane, other than to say it could cut travel times by 15 to 20 percent. Boeing first acknowledged the plans in a news release on Wednesday, overshadowed by the announcement that it would move its headquarters out of Seattle after 85 years.
A January report in the Wall Street Journal, citing unnamed Boeing officials, said the plane could seat about 200 to 300 people and fly at Mach 0.95, or 95 percent of the speed of sound. The 747's typical cruising speed is Mach 0.85.
``We're really getting excited about a set of technologies'' related to the new plane, Alan Mulally, president and chief executive of the company's jetliner unit, said at Boeing's annual conference in Seattle this week.
The plane could be introduced in the second half of the decade, he said. Airbus, the No. 2 planemaker after Boeing, has said its A380 will enter service in 2006.
Boeing will approach potential suppliers about the new jet over the next two to three years, Mulally said. It's likely to be a replacement for Boeing's mid-sized 757 and 767 jetliners, many of which are 20 years old, analysts said.
``If they can pull it off, you can just write Airbus off right now,'' said Michael Boyd, president of Boyd Group/Aviation Systems Research in Evergreen, Colorado. ``That is a material, physical breakthrough in technology. We haven't had any of those since the 747.''
The plane would cost $8 billion to $10 billion to develop, with $2 billion funded by suppliers, Wood said. It's unlikely 747X development would continue because Boeing wants to keep annual research and development costs to around 3 percent of sales, which were $51 billion last year, she said.
The 747X won't necessarily be dropped, said Robert Toomey, an analyst with Dain Rauscher Wessels in Seattle.
``There's still going to be space in the market for that higher-capacity airplane,'' he said. ``I don't think this new plane replaces the 747 derivatives, but I think it looks very solid and there's a good likelihood they'll go ahead.''