Air Transport World

Seattle dreaming: Boeing has set itself some hefty challenges to launching its proposed 7E7 Dreamliner, its first all-new program in 13 years.(Cover Story)

Boeing, says Walt Gillette, is "10 for 10" when it comes to launching commercial jet programs. "We have not produced one that was not successful in the market--we built at least 650 aircraft, the lowest was the DC-10. But in this business, if you go 10 for 11, that is not a good thing. That could be the end of us." He reminds a visitor that the name on Seattle-Tacoma's shuttle train is Westinghouse. "One hundred eight years on the New York Stock Exchange. Two years ago, the owners decided that they'd make more money if they finally cashed the place in."

The fact that the senior engineer on Boeing's 7E7 program can even mention such an apocalyptic possibility is a marker to the manufacturer's position at the end of half-a-dozen tumultuous years.

At the end of 1996, the company cemented its dominance of the airliner business by agreeing to acquire McDonnell Douglas, its only US rival. But within months the view from Seattle was very different. Booming sales outpaced Boeing's ability to build airplanes profitably and on schedule. New President Harry Stonecipher, who had come aboard in the McDonnell Douglas purchase, called Boeing "arrogant" and fired Ron Woodard, the commercial airplane chief who had led the sales charge that helped to put the final nail in the coffin of MDC's civil aircraft programs. Woodard's replacement was Man Mulally, who had made his name on the successful 777 program.

The company recovered with creditable speed and forged ahead with a new-product plan, including stretched and re-engined versions of the 767 and 747. But in March 2001, it withdrew the latter two projects and--with massive fanfare--unveiled the Mach 0.98 Sonic Cruiser. Then came the bust and the 9/11 attacks, which took place a week after Boeing's corporate management moved from Seattle to a Chicago high-rise.

Back in Seattle, deep and rapid layoffs--it's not unusual to find departments where the lowest-seniority surviving employee has 15 years with the company--reflect a slump in sales that has hit older models particularly hard. The end of the line for the 757 was announced in October. The newest 767 version, the stretched 767-400, sold to only two customers. The A330-200 carries more people, flies farther and costs less than the 767-300. Several efforts to reinvigorate the 747 have fizzled. "Internally, they realize that they're down to the 737 and 777 for all intents and purposes," comments Byron Callan, aerospace analyst at Merrill Lynch. As Boeing has reduced its production, Airbus's output has declined less precipitously, to the point where the companies are roughly level in deliveries. …

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