B7E7 may launch with non-US carrier

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http://news.morningstar.com/news/DJ/...185061864.html

DALLAS -- It is becoming increasingly likely that Boeing Co.(NYSE:BA)
(BA) will launch its planned new 7E7 jetliner without a U.S. airline as
a launch customer -- a first for the aerospace company, The Wall Street
Journal has learned.

The head of Boeing commercial airplanes unit has quietly received a
limited go-ahead from the company's board to offer the proposed new
200-seat airplane for sale to two Japanese airlines, months ahead of
schedule.

According to people familiar with the situation, commercial-airplanes
unit Chief Executive Alan Mulally visited Japan in the last half of
September to meet with top officials at Japan Airlines Systems Corp.
and All Nippon Airways Co. Ltd.(ANA) The two carriers, Japan's biggest,
are seen as likely launch customers for the ultra-efficient airplane.

The permission from Boeing's board for Mr. Mulally to begin serious
talks with a handful of customers is the strongest indicator yet the
Chicago-based aerospace company's latest airplane project is gaining
momentum.

During the meetings, Mr. Mulally discussed preliminary proposals for
the airplane, including expectations of its performance and possible
sales price. The airlines aren't expected to make a decision for
several months, but both have said previously they are interested in
buying the airplanes.

Boeing declined to discuss details of the meetings or its proposals to
the airlines, citing confidentiality. Airline officials couldn't be
reached for comment.

"We are encouraged by the pace of discussions with our customers and
our progress in defining the 7E7 with them," said Boeing spokesman Tom
Downey. "We believe we are on track with a very positive market
offering."

For Boeing, the decision to pursue the development of a new airplane
without a U.S. launch customer isn't without risk.

In the past, the company has relied on a close working relationship
with one or two major U.S. carriers, and those relationships typically
allow the jet- maker to work the kinks out of its new models while
giving the launch customers a chance to influence the airplane's
design. By not having a major carrier on board as a customer, Boeing is
risking alienating potentially large buyers for the airplane.

Boeing executives say they are continuing to work "closely" with
potential U.S. customers, even though the ongoing domestic airline
slump has left most of them too strapped for cash to think seriously
about launching an all-new airplane type.

The decision to pursue non-U.S. carriers is seen by many within Boeing
as inevitable if the company is to launch a replacement for its aging
757 and 767 fleets while rival Airbus is occupied with developing the
A380, a 555-seat super-jumbo jet that is expected to enter service in
2006.

People familiar with Boeing's strategy say the company also hopes to
use the airplane-development program as another competitive weapon in
its campaign to keep its European competitor from gaining a strong
foothold in Japan. So far, Airbus has been unable to make major inroads
at the top-tier Japanese carriers. Both Japan Airlines and Air Nippon
fly all-Boeing fleets, including a total of about 70 twin-aisle 767
jetliners that could be replaced by the 7E7.

As part of Boeing's planning for the airplane, the manufacturer has set
up a so-called 7E7 Council of suppliers which includes Japan's
Mitsubishi Heavy Industries Ltd.(MHI), Fuji Heavy Industries Ltd.(FJH)
and Kawasaki Heavy Industries Ltd.(KWH)

According to people familiar with Boeing's planning, the company is
considering giving the Japanese "heavies" as much as 35% of the total
airframe construction, including the prestigious job of building the
wings, which until now Boeing has kept in house for proprietary
reasons.

Boeing has declined to discuss where specific parts of the plane would
be fabricated, but the company has made it clear it is trying to
develop a new business model that will likely include taking on major
risk-sharing partners as a way to reduce Boeing's upfront development
costs.

Mike Bair, the engineer in charge of the project, said the company's
goal is to develop the airplane such a way that final assembly of a
collection of large components could be completed in three days,
compared to up to 18 days for Boeing's newest widebody, the 777.

The firm itself presented strong circumstantial evidence earlier this
week that something as large as the wings might be made overseas when
it released an artist's rendering of a planned cargo version of its
747-400, in which the hump on the upper part of the fuselage has been
widened and extended the length of the airplane to accommodate
extremely large cargo.

By operating a fleet of three planes, said Boeing, it could transport
completed sections of the airplane across the Pacific overnight instead
of waiting up to a month for parts to arrive by sea, saving 40% in
transportation and inventory costs.

BL.
- --
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A Guy Called Tyketto wrote:

The decision to pursue non-U.S. carriers is seen by many within Boeing
as inevitable if the company is to launch a replacement for its aging
757 and 767 fleets while rival Airbus is occupied with developing the
A380, a 555-seat super-jumbo jet that is expected to enter service in
2006.


Up until now, I would have said the odds of the 7e7 launching were less than
50/50. However, earlier this week someone posted that the 757 line was being
shutdown with only 12 remaining orders.

As much as Boeing wants to get out of commercial aircraft, I can't see them
ceeding the narrowbody long haul market just yet. So call the odds 60/40.

uh ...don't think that Boeing wants out of the commercial aircraft market -
that would mean ceding the market to airbus and that's something that won't
happen unless Boeing goes belly-up.

There has been a shift in approach though - Boeing wants to be an
"assembler" and not a "manufacturer" - the recent shift in Boeing
manufacturing "Phil"osophy has been to discontinue manufacture of "parts"
(offload to various "suppliers") and attampt to concentrate on the "system
integration" portion. It used to be that trainloads of aluminium rolled in
one end and aircraft rolled out the other. Now it's "chunks of aircraft"
that roll in. The aircraft roll out, but the "internal contribution" (how
much is "made" internally) is significantly lessened and dropping steadily.

Anyway - Recent "revelations" that Boeing is expecting to "fly" in various
components with a new "jumbo guppy" modified 747 (that incidently Boeing
will not OWN, just pay for "use" - thus reducing capital costs) lend
credence to the speculation that only the "final assembly" will be done in
the US. Further speculation is that Boeing will for the first time give up
the "core competency" of wing assembly and ship wings in as well (not only
fuselage). Add to that the concept of "major partners" (risk as well as
cost sharing) and that ever popular "economic offset" and you might
understand why Boeing is courting Japanese airlines (but anyone is welcome
to get on the launch bandwagon)

This is parallel to what airbus does in that the consortium sends major
assemblies from the fabrication facilities to the final assembly point (not
even in the same country, but in "modern" Europe, there is little
difference, anyway) and fits the large pieces together. Add to that the
design paradigm shift to a "plastic fantastic" aircraft (mostly composite -
no more "tin bending" as the major manufacturing process) and you see that
"build anywhere" means just that.

Anyway, my US 2 cents worth and an opinon formed on my own and not either
representative of or approved by my employer. (read the message header)

"Clark W. Griswold, Jr." wrote in message
...
A Guy Called Tyketto wrote:

The decision to pursue non-U.S. carriers is seen by many within Boeing
as inevitable if the company is to launch a replacement for its aging
757 and 767 fleets while rival Airbus is occupied with developing the
A380, a 555-seat super-jumbo jet that is expected to enter service in
2006.


Up until now, I would have said the odds of the 7e7 launching were less
than
50/50. However, earlier this week someone posted that the 757 line was
being
shutdown with only 12 remaining orders.

As much as Boeing wants to get out of commercial aircraft, I can't see
them
ceeding the narrowbody long haul market just yet. So call the odds 60/40.

"Clark W. Griswold, Jr." wrote:
Up until now, I would have said the odds of the 7e7 launching were less than
50/50. However, earlier this week someone posted that the 757 line was being
shutdown with only 12 remaining orders.

It was pretty clear all along that the 7E7 would replace both the 767 and 757,
with a big chunk of 757 going to the 737-900 and 737-900ER (is that launched
yet ?)

I think that the big news here is that Boeing is realising that the USA air
market will remain stagnant for a very long time. And Boeing needs to start
moving on the 7E7 right away, so it is now forced to look elsewhere for launch customers.

In north america, it seems that the only reliable purchases are 737s by
Southwest and Westjet. Jetblue buys Airbus. All purchases by the old airlines
are just PR exercises that will later on result in deferals and cancellations
because the big airlines haven't yet gotten their act together.

With consolidation in europe, it will be interesting to see in the medium term
if the european airlines will make any significant orders.

Boeing MUST have a modern product to replace the 767. And it needs it ASAP,
even though there isn't a sufficient market to justify the big bucks to make
the 7E7. Every aging 767 that gets replaced by An Airbus plane is a lost sale
to Boeing for a very long time.

I think that Boeing and Airbus will need to reshape themselves to
survive/thrive on aircraft replacement markets, not on growth by airlines.

DALing wrote:
This is parallel to what airbus does in that the consortium sends major
assemblies from the fabrication facilities to the final assembly point (not
even in the same country, but in "modern" Europe, there is little
difference, anyway) and fits the large pieces together.

I find it interesting that Boeing is adopting the very paradigm that it used
to call so inefficient in its PR exercises to discredit Airbus. But then
again, even the 777 was also built to a large extent offshore.

As far as using a modified 747 to transport parts, shouldn't Boeing have
simply ordered an Airbus super transporter ? Or made use of Antonov 124s (or
even the 125 ?)?

However, I belive that even Bombardier has stopped using the Antonovs and is
now shipping fuselages from Ireland to Canada via ship because it is cheaper.
So one wonders if using aircraft to ferry aircraft parts is really the most
cost efficient method. May look good for PR though. And Airbus will be using
barges and trucks to ferry some of the A380 parts.

However, the 747 has some disadvantages over the antonov in that it is much
higher off the ground and needs more elaborate equipment to load/unload.

Also, if you load via the nose, isn't the height restricted by the cockpit
floor ? So what is the point of extending the upper deck to the tail if the
entrance via the nose will continue to be restricted by the presence of the
cockpit ? Isn't the clearance under the cockpit less than what it is when you
load via side doors in the back for current 747 without the extended upper
deck ?

Or do they plan on having huge side doors on the 747 that will span the entire
height of the extended fuselage and wide enough to insert wings and fuselage
sections without the need to fit them through the nose under the cockpit ?

The major growth market in the United States is in the discount airline
market, which tend to use only one type of aircraft for cost savings
purposes. JetBlue uses Airbus A-320. Frontier is converting from an Boeing
737 to Airbus 318 and 319. AirTran uses Boeing 717. Spirit uses the MD-80
series. Southwest uses Boeing 737. ATA uses Boeing 737, 757, and a few
L-1011. Europe is becoming much like the United States in this regard, with
EasyJet and RyanAir taking the place of many of the flag carriers.

Tom Smith

"Coronal Sulcus" wrote in message
...
"Clark W. Griswold, Jr." wrote:
Up until now, I would have said the odds of the 7e7 launching were less
than
50/50. However, earlier this week someone posted that the 757 line was
being
shutdown with only 12 remaining orders.

It was pretty clear all along that the 7E7 would replace both the 767 and
757,
with a big chunk of 757 going to the 737-900 and 737-900ER (is that
launched
yet ?)

I think that the big news here is that Boeing is realising that the USA
air
market will remain stagnant for a very long time. And Boeing needs to
start
moving on the 7E7 right away, so it is now forced to look elsewhere for
launch customers.

In north america, it seems that the only reliable purchases are 737s by
Southwest and Westjet. Jetblue buys Airbus. All purchases by the old
airlines
are just PR exercises that will later on result in deferals and
cancellations
because the big airlines haven't yet gotten their act together.

With consolidation in europe, it will be interesting to see in the medium
term
if the european airlines will make any significant orders.

Boeing MUST have a modern product to replace the 767. And it needs it
ASAP,
even though there isn't a sufficient market to justify the big bucks to
make
the 7E7. Every aging 767 that gets replaced by An Airbus plane is a lost
sale
to Boeing for a very long time.

I think that Boeing and Airbus will need to reshape themselves to
survive/thrive on aircraft replacement markets, not on growth by airlines.

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Thomas Smith -no-spam wrote:
The major growth market in the United States is in the discount airline
market, which tend to use only one type of aircraft for cost savings
purposes. JetBlue uses Airbus A-320. Frontier is converting from an Boeing
737 to Airbus 318 and 319. AirTran uses Boeing 717. Spirit uses the MD-80
series. Southwest uses Boeing 737. ATA uses Boeing 737, 757, and a few
L-1011. Europe is becoming much like the United States in this regard, with
EasyJet and RyanAir taking the place of many of the flag carriers.

Tom Smith

TRS uses more than just the B717. They are leasing B73s, B75s,
and A320s for longer distance flights. Though Chartered, CCP is using
B722s. Also, Australia has advanced further than Europe has, with VOZ
having being voted the best airline on the planet, which is using an
entire B737 and B738 fleet.

BL.
- --
Brad Littlejohn | Email:
Unix Systems Administrator, |
Web + NewsMaster, BOFH.. Smeghead! | http://www.sbcglobal.net/~tyketto
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A Guy Called Tyketto wrote:

TRS uses more than just the B717. They are leasing B73s, B75s,
and A320s for longer distance flights. Though Chartered, CCP is using
B722s. Also, Australia has advanced further than Europe has, with VOZ
having being voted the best airline on the planet, which is using an
entire B737 and B738 fleet.

Who voted?

In article ,
AJC wrote:

On Fri, 17 Oct 2003 13:53:54 -0400, Coronal Sulcus
wrote:

DALing wrote:
This is parallel to what airbus does in that the consortium sends major
assemblies from the fabrication facilities to the final assembly point (not
even in the same country, but in "modern" Europe, there is little
difference, anyway) and fits the large pieces together.

I find it interesting that Boeing is adopting the very paradigm that it used
to call so inefficient in its PR exercises to discredit Airbus. But then
again, even the 777 was also built to a large extent offshore.


One does rather get the impression that Boeing decision-makers take
regular outings to Toulouse to do the tour of the Airbus assembly

One wonders if this was accident or by design. The 4 airbus partner
countries each divided fabrication work for their own countries.

Not the Karl Orff wrote:
One wonders if this was accident or by design. The 4 airbus partner
countries each divided fabrication work for their own countries.

And Boeing gives work to countries who may be good customers of that plane.

Not that Airbus also gives lots of contracts to non-Airbus countries.

It would be interseting to know if Boeing's awarding of contracts to other
countries is good business or good PR (leading to sales).

Many businesses in the western world are now outsourcing much of their work to
india (leading to thousands of job cuts here). This is clearly a business
decision that outweights the bad PR that results from such announcements.

But in the case of Boeing, is there a clear business case for giving wing work
to Japan, or is this something that is done to secure sales even if it means
that the oursourcing to Japan may not be the most efficient ?