This article is SOOOOOOO incredibly biased that I dont even know where to begin. The same one can be seen in the WSJ:
In an anonymous white building with mirrored windows near Boeing Co.'s jumbo-jet plant in Everett, Wash., engineers are planning an innovative plane that could let Boeing zip past rival Airbus with its first all-new jetliner since 1995.
The 7E7 would bring together advanced materials, the latest manufacturing methods and the newest electronics in a jetliner more efficient than any in the sky. The question is: Will it ever get built?
Boeing faces a critical choice between spending boldly to develop a new jet and hunkering down to play defense during the airline industry's worst downturn ever. Two of the most powerful members of the company's 11-person board are said to be raising cost concerns about the 7E7, as they press Boeing to improve its earnings and stock price -- even if that means sacrificing cutting-edge engineering.
Harry Stonecipher and John McDonnell are arguing behind the scenes that Boeing, once the world's dominant commercial-plane maker, ought to continue its striking diversification into defense, space and equipment financing, according to people familiar with the situation. The two former McDonnell Douglas Corp. executives came aboard when Boeing acquired that company in 1997. Since then, they have pushed Boeing to wring more profit out of existing product lines, while expanding in areas less volatile and expensive than passenger jets.
Three times in its 86-year history Boeing has soared by betting on highly innovative jet designs: The 707 was the first trans-Atlantic jet; the 747 was the first jumbo jet and the 777 was the first ultra-long-haul twin engine. Boeing hasn't introduced an all-new plane for eight years. Instead, it has attached higher price tags to slightly modified versions of existing models. The last two efforts before the 7E7 to build a genuinely new flagship -- including the high-speed, fuel-efficient Sonic Cruiser -- never made it off the drawing board because of cost concerns and faltering demand for new planes.
Some customers are also worried. "Boeing should be trying to leap-frog Airbus in pricing and technology the way that Airbus leap-frogged them," says Steven Udvar-Hazy, chairman of aircraft-leasing company International Lease Finance Corp., the largest customer for both manufacturers. Two years ago, Airbus launched an ambitious program to develop a 555-seat jumbo aircraft called the A380. It has garnered 95 orders so far.
Phil Condit, Boeing's chairman and chief executive, defends his company's go-slow approach and rejects the notion that Boeing has lost its way in the commercial market. Boeing, he says, has a "responsibility" to find a way to develop jetliners for less. The cost of designing the 7E7 could reach as high as $10 billion, according to people familiar with the project. But the Stonecipher-McDonnell duo is thought likely to veto it unless the figure shrinks by billions. The board is expected to decide the project's fate early next year.
Spending on the 7E7 has been the subject of private debate between Messrs. Stonecipher and McDonnell, on one side, and fellow board member James McNerny Jr., chairman and chief executive of 3M Co., on the other, according to people familiar with the situation. Mr. McNerny, the former head of General Electric Co.'s jet-engine division, is said to be concerned that an overemphasis on the bottom line could cause Boeing to miss its chance to pull ahead of Airbus.
Once known for the breadth of its commercial product line, Boeing is beginning to resemble the old McDonnell Douglas. In the 1980s and 1990s, that company slipped badly as it shied away from developing new jets. Today, only two of Boeing's six models -- the single-aisle 737 and the wide-body 777 -- are selling well. The 747, 757 and 767 have outdated technology and are losing to Airbus competitors. The 107-seat 717, which Boeing inherited from McDonnell Douglas, has been a commercial flop.
"There is the question out there about whether Boeing is headed the way of McDonnell Douglas," says Byron Callan, an aerospace analyst with Merrill Lynch & Co. "Douglas frittered away a pretty solid market position by not taking risks."
Although retired as an executive, Mr. Stonecipher, 66, stays in close contact with members of his former team. They include Michael Sears, Boeing's chief financial officer, and David Swain, who oversees cost-saving efforts on the 7E7.
Mr. Stonecipher's gruff manner and hard line on development spending have won him relatively few fans in Boeing's engineering corps or on the factory floor. "He isn't emotional about airplanes; it's all business," says a former senior company executive.
Before the McDonnell merger, Boeing relied on commercial aviation for 80 percent or more of its revenue. In 2002, that figure was 52.5 percent. The company reported net income of $492 million last year on revenue of $54.1 billion. (Before "special charges," its net income would have been $2.3 billion, the company said.)
Boeing has gone from a relatively insignificant military contractor to the country's second-largest. Its defense unit, based at McDonnell's old St. Louis headquarters, is expected to contribute just over half of the company's projected $49 billion in revenue this year from selling fighter jets, cargo planes and weapons to governments around the world. In a purposely symbolic action two years ago, Mr. Condit, after consultation with Mr. Stonecipher, moved Boeing's headquarters from its commercial-aviation enclave in an industrial district in Seattle to a high-rise building in downtown Chicago.
Some airline executives say that Boeing has helped contribute to the perception that it has lost its way by confusing customers with a series of potential new versions of old aircraft that have failed to materialize. A Boeing spokesman counters that proposing derivative models that might never be built is a valid way to determine what customers want. The company has delivered at least one derivative in each of its six model families since 1997, but most have been slow to catch on.
All hopes for real innovation now rest on the 7E7, a project Boeing announced five months ago. In preliminary artist's renderings, the plane looks like a traditional twin-engine jetliner, except for wingtips that slant backwards. The company says the fuel-efficient twin-aisle jet would carry 200 to 250 passengers on long routes now possible only with larger planes.
Publicly, Boeing says that its customers are excited by the 7E7. But privately, people familiar with the venture say the picture is cloudier. These people explain that most of the major U.S. airlines that would be crucial to the jet's success have been too consumed with staying aloft to give Boeing a clear idea of the kind of amenities and performance they would demand from a new plane. Without such vital variables as desired range and seating capacity, designers can't easily complete their task. Worse, the word coming back from customers in Asia is that they want an airplane that is smaller and shorter-range than the one Boeing thinks would be most marketable in the rest of the world.
Boeing says the potential market for the new plane is huge: About 3,000 older 767s, 757s and Airbus A330s are due for replacement by the end of the decade. The question the company's board faces is whether the 7E7 will be different enough from existing models to entice airlines to pay a premium for it.
Gordon Bethune, chairman and chief executive of Continental Airlines Inc., which flies all Boeing aircraft, says that compared with the Sonic Cruiser, a futuristic Boeing model that never went into production, the 7E7 "will be a real yawner" for airline executives and passengers. "It's not very sexy," Mr. Bethune adds, "but it could give Boeing a leg up over Airbus in that part of the market."
But that's a big if. Boeing insiders say that Messrs. Stonecipher and McDonnell probably will help block the project early next year unless a way is found to develop and produce the 7E7 at substantially lower cost than the 777. Boeing hasn't released final cost figures for developing the 777, but some company executives have hinted privately that the overall number was $7 billion. Mr. McDonnell says the question of whether to proceed with the 7E7 "will be up to the board; I cannot speak for the board."
People involved with the 7E7 program say that the board has said the new airplane must be designed for no more than 40% of the money it took to develop the 777. In addition, the board has said the plane must be built for no more than 60% of what it takes to assemble today's 777s. Without confirming or denying the percentages, Mr. Condit says he established stringent cost limits. "What I try to do is be very clear with everybody in the business units what I believe the board's criteria for success are going to be," he says.
Boeing's last great hope for a big breakthrough was the Sonic Cruiser. After Airbus announced two years ago that it would build the giant A380, Boeing unveiled the futuristic concept that executives said they had been secretly working on for some time. The Cruiser featured swept-back wings and an innovative design that included relocating the horizontal tail fins to a spot behind the cockpit. It was supposed to fly at just below the speed of sound and enable Boeing to blow past its European competitor.
engineers are planning an innovative plane that could let Boeing zip past rival Airbus with its first all-new jetliner since 1995.
Listening to this, you'd think that Boeing had actually fallen behind Airbus in revenue
Boeing hasn't introduced an all-new plane for eight years. Instead, it has attached higher price tags to slightly modified versions of existing models.
Funny... so did Airbus. The gap between the Airbus' newest launch (A380) and its second most recent is of similar time span
Some customers are also worried. "Boeing should be trying to leap-frog Airbus in pricing and technology the way that Airbus leap-frogged them,"
Um... perhaps because Airbus cannot justify a premium in pricing in any of their products (relative to the corresponding Boeing model) with the exception of the A330
Two years ago, Airbus launched an ambitious program to develop a 555-seat jumbo aircraft called the A380. It has garnered 95 orders so far.
Good for them... only a few hundred more to go, and not at reduced launch-customer cost
The 107-seat 717, which Boeing inherited from McDonnell Douglas, has been a commercial flop.
Yet, unlike the A318/736... the 717 is actually selling, and its current owners arent cancelling orders left and right.
Boeing hasn't released final cost figures for developing the 777, but some company executives have hinted privately that the overall number was $7 billion.
Nice that she only states the low-ball. According to some sources, the bill on 777 is far above that
Boeing's last great hope for a big breakthrough was the Sonic Cruiser.
What kind of crap is this statement?! Boeing said from DAY
1 that the plane might not take the shape it's being offered in; and rather could be applied to a slower but more efficient model.
After Airbus announced two years ago that it would build the giant A380, Boeing unveiled the futuristic concept that executives said they had been secretly working on for some time.
Every analyst and their grandmother labeled the S.C. as "Bransonian" PR
.... Forbes, NY Times, Wall Street Journal, Jane's; just to name a few of the "minor" sources.
enable Boeing to blow past its European competitor.
You mean like it's done every year since Airbus has been in existence?