Boeing's market launch for the 7E7 was widely expected. What could not have been predicted, is that the launch would take place against the backdrop of an ethical scandal that has made it even more pressing for Boeing to reclaim its roots as an aviation pioneer
In mid-December, almost a century to the day that the Wright brothers first took to the air, Boeing proudly announced that it would offer its first new model in a decade: the 7E7 Dreamliner on which so many of its hopes will now be pinned. Yet even as it launched its new dream, Boeing could not entirely dispel the storm clouds that continue to linger over the group.
Chief executive Harry Stonecipher may have been right in declaring that there is a compelling business case for the new aircraft. But the audience were all too aware that it should not have fallen to him to say so. Stonecipher was only brought back from retirement to head the group two weeks earlier after chairman Phil Condit had been forced to stand down in the aftermath of a scandal that had already claimed two other high-ranking executives.
As yet, this is only a marketing launch for the 7E7. The aircraft will now be offered for sale, but still has to win sufficient orders over the next year before Boeing gives the programme a full go-ahead. Stonecipher pointed out that the 737 and 777 had each been launched with just one committed customer, although he concedes that that is one more than Boeing has now.
The irrepressibly upbeat Alan Mulally, head of Boeing's commercial airplane unit and the man who saw the 777 into the air with his "working together" programme, says that Boeing is working with 50 airlines. Indeed, Boeing has had potential customers into its headquarters since autumn to talk about what they would want. Cathay Pacific officials made positive noises about the competitiveness of the Dreamliner. In a recent press briefing in Tokyo, Yoji Ohashi president of All Nippon Airways expressed more interest in the 7E7 than other offerings from either Boeing or Airbus. Rod Eddington at British Airways too is among those who had urged Boeing to drop the original Sonic Cruiser in favour of a modern mid-sized offering.
Mulally repeats Boeing's gospel: the future lies not with the large, not even with the swift, but with the medium and efficient. He is not alone in insisting that that frequency and point-to-point service are going to be king in deregulated markets. The low-cost carriers have been preaching such a message for years on short-haul. Now Mulally himself speculates that a low-cost airline, "perhaps one that does not now exist", could use the 7E7 as the basis for an international discount carrier.
These are all strong arguments, that Boeing has made eloquently, even as its sales books slimmed. But they are not the sole reason why the new aircraft went ahead. The company had little choice but to take this step. After a decade of false starts over a successor to the 747 and all the glitz around the Sonic Cruiser, customers would hardly have trusted Boeing again if the 7E7 too had quietly disappeared.
There is a political angle too in an America which sees Boeing's eclipse by its European rival as yet another sign of the demise of US manufacturing. Some are already patriotically calling the 7E7 "America's Plane".
A deeper internal dynamic is also at play. When Condit resigned, he said he was acting to help Boeing distance itself from the "controversies and distractions" of ethical scandals, including the controversy surrounding a $21 billion deal to provide 767 jets as tankers to the Air Force. It emerged Mike Sears, Boeing chief financial officer and Condit's heir apparent, had offered a job to a key USAir Force official while that deal was still in progress. Both were fired.
Boeing badly needs to soar above the taint of such shabby defence dealings and rediscover some of its old spirit as an aviation pioneer.
The 7E7 project is also a key test of Boeing's many claims to have re-engineered itself. It is to be built in a new manner at the Everett plant, the historic home of the 747 and 777. Washington State had won out in a nationwide contest to keep final assembly for this widebody too, backed by a $3.2 billion incentive package. The pieces will arrive by air for final assembly, very much in the manner of the Airbus process at Toulouse. Like Airbus, Boeing plans to enlist suppliers as risk-sharing partners, although unlike Airbus, it intends to keep them as suppliers rather than part of the corporate structure. Boeing would not be pinned down on just how much risk sharing Boeing would seek, nor say how many orders or customers would be needed to make the 7E7 workable.
These are more than details; those are the issues that the company will have to focus on when it comes down to the decision to start cutting metal. And far more than just credibility is at stake. The 7E7 could seal Boeing's fate as a player in the commercial aircraft market.
COLIN BAKER LONDON
Source: Airline Business
