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Archive for Tuesday, April 27, 2004

Boeing launches 7E7 airliner

Firm gets 50-plane order from All Nippon Airways

April 27, 2004

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— Boeing Co. needed some good news, and it got some Monday.

The beleaguered aerospace giant officially launched its new 7E7 Dreamliner passenger jet with a massive 50-plane order from All Nippon Airways -- Boeing's biggest initial order for a new model.

The deal would be worth $6 billion at the list price of $120 million a plane, but major airline customers typically negotiate steep discounts. Neither Boeing nor ANA released a price for the order.

Good news has been scarce for Boeing's Seattle-based commercial airplanes division, which has endured a drought of new airplane orders and had to shelve two earlier commercial jet programs for lack of customer interest. Furthermore, European archrival Airbus pulled ahead of Boeing in jetliner deliveries last year for the first time.

"Boeing had really kind of developed an image of 'all hat and no cattle,' to use a Texas term, so this finally is saying, 'Yeah, we're here to make airplanes,'" aviation consultant Scott Hamilton said.

The Chicago-based aerospace giant also has been shaken by embarrassing scandals in its defense business, which cast a cloud over the company and prompted the resignation of former chief executive Phil Condit.

"This was exactly what they needed -- and then a little more," said Richard Aboulafia, an analyst with the Teal Group.

Mike Bair, Boeing's senior vice president for the 7E7 program, called the All Nippon deal a "really, really important thing for the Boeing company."

He said Boeing expected to announce additional 7E7 orders soon and that Chinese carriers were especially interested in the plane to meet growing passenger demands and increased cargo needs. But he also noted that the company had made firm offers to more than a dozen carriers, including "a couple" of U.S. carriers.

The All Nippon order broke Boeing's record for launch orders, set in 1960 when Eastern Airlines and United Airlines each ordered 40 727s.

This Boeing Co. model of a Boeing 7E7 Dreamliner passenger jet has
an All Nippon Airways paint scheme.

This Boeing Co. model of a Boeing 7E7 Dreamliner passenger jet has an All Nippon Airways paint scheme.

The 7E7 -- the "E" stands for efficiency -- is the first new airplane Boeing has introduced in more than a decade, since it launched the 777 in October 1990.

Boeing says the Dreamliner will use 15 percent to 20 percent less fuel per passenger. It will have bigger windows and slightly wider aisles and seats than other planes. Boeing will assemble the plane in Everett, about 25 miles north of Seattle, where the 747, 767 and 777 are made.

The company's Wichita, Kan., facility, which Boeing is considering selling, is slated to build the Dreamliner's engine pylons, forward fuselage and flight deck.

Production is to begin in 2006, and the airplane is expected to be in service in 2008.

Mitsubishi, Kawasaki and Fuji Heavy Industries, Japan's three leading industrial conglomerates, will build about 35 percent of the 7E7, including the wings -- the first time outside companies have been given the lead in wing production for a Boeing commercial jet.

Boeing is relying heavily on outside companies to supply parts for the 7E7, and its push to keep costs low is expected to ripple through the industry.

"It's going to be a whole new way of building a plane, and it's going to press everybody beneath them," Aboulafia said.

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