This article from NYTimes.com has been sent to you by psa188@xxxxxxxxx /-------------------- advertisement -----------------------\ IN AMERICA - now playing in select cities IN AMERICA has audiences across the country moved by its emotional power. This Holiday season, share the experience of this extraordinary film with everyone you are thankful to have in your life. Ebert & Roeper give IN AMERICA "Two Thumbs Way Up!" Watch the trailer at: http://www.foxsearchlight.com/inamerica \----------------------------------------------------------/ In a Shaky Present, Boeing Weighs Risks of Building a Jet of the Future December 3, 2003 By MICHELINE MAYNARD The future of the Boeing Company, no matter its tumultuous present, rests in large part on the wings of its next-generation jet. Boeing has not even decided to build the jet, the 7E7, known as the Dreamliner, nor does it have any firm customers for it. The soonest it can get the aircraft on the market is 2008. Even as the company has been rattled by executive resignations and a scandal involving its Pentagon contract for refueling tankers, it faces a critical decision on whether to proceed with the 7E7, which would replace the 757 and 767 in the middle of its aircraft lineup. The plane, Boeing says, will offer greater fuel efficiency and passenger comfort. Its curvy, futuristic body will be built in part from composite material that is lighter than metal. This month, Boeing's board is set to consider whether to begin marketing the jet, which analysts estimate would cost Boeing and its partners at least $7 billion and up to develop. If it can find customers, the 7E7 would be the company's first significant jet program since it began work on the 777 in 1990, and its third try just this decade at developing a new aircraft. Its previous offerings, a supersonic aircraft called the Sonic Cruiser, and a supersize version of its 747 jumbo jet, called the 747X, failed to generate interest. The decision on the 7E7 looms as Boeing is entrenched in a Pentagon ethics controversy that forced the resignation of its chief executive, Philip M. Condit, on Monday, and the firings of its chief financial officer and another executive last week. Mr. Condit will be succeeded by Harry C. Stonecipher, the company's former president, whose expertise lies on the military side of Boeing's operations, not its commercial aviation business. On his immediate horizon, Mr. Stonecipher must quickly clean up the mess resulting from questions surrounding the award of a Pentagon contract to Boeing for 100 tanker planes. Yesterday, the assistant defense secretary, Paul D. Wolfowitz, said the contract was being held up, pending an auditor's review of whether Boeing acted improperly by hiring the Air Force official in charge of awarding the contract. Boeing's stock, which had climbed yesterday morning as investors digested the news of Mr. Stonecipher's appointment, fell after word of the Pentagon's action. The shares closed down 19 cents, to $37.83. That Mr. Stonecipher would lead the decision on the 7E7's future strikes some analysts as a quirk of fate. While chief executive at McDonnell Douglas, which Boeing acquired in 1997, Mr. Stonecipher moved the company's emphasis away from commercial planes and toward military aircraft. In the years since then, when he served as Boeing's president before retiring in 2002, the military division passed the commercial aviation unit in revenue, despite Boeing's historic devotion to aircraft development. Analysts have theorized that Mr. Stonecipher sees little merit in the 7E7, with the industry in such financial straits. On Monday, however, Mr. Stonecipher said he backed the 7E7 program. And should it go forward, he will become its titular salesman, although Boeing has already put on an extensive publicity campaign for the 7E7. Among other things, it held a contest to name the jet, splashed its colors on its Web site, and gave details of the plane's interior, all in an effort to generate interest. Even so, experts said there was no guarantee Boeing's board would move forward. "I don't think it's a foregone conclusion, with Stonecipher in the C.E.O.'s seat," said Prof. Charles Hill at the University of Washington School of Business in Seattle. Professor Hill said the biggest hurdle was the plane's dearth of orders. While Boeing is focusing on Asian carriers, only Japan Air Lines has said it might be interested. No big American carrier has yet signaled it would buy one. Professor Hill said Mr. Stonecipher would not let Boeing proceed with the 7E7 without orders from several airlines in hand. Regardless, Boeing has to do something to spruce up its model range. "The Sonic Cruiser was a bust,'' Professor Hill said. "The superjumbo was a bust, and the 777 is aging. There is a gap and they need to fill it." Even more important is the threat posed by Airbus, the European aircraft consortium. Its competing jet for the Boeing model, the A330, has already been delivered to its first customers, including Northwest Airlines, which is flying it on European routes from the United States. Airbus, meanwhile, is developing its own jumbo jet, the A380, which is set for introduction in 2006. Roman Szuper, a credit analyst with Standard & Poor's, said he would be surprised if Boeing backed away from the 7E7 project, given how much emphasis it has placed on the plane. "This is the best hope, the best prospect" for Boeing to challenge Airbus, Mr. Szuper said. He added, "At this point, the market is a duopoly, and the company has got to come up with new models." Mr. Szuper said he was confident Mr. Stonecipher would insist on a tight rein on costs. He said a new, more efficient manufacturing system for the plane, which Boeing has said would cut the plane's production costs by 10 percent or more, would be an element in making it a success. "If they do it correctly in terms of the initial price, and achieve lower operating costs, then I think there is the potential that this could be a successful model," Mr. Szuper said. The danger, he warned, was that Airbus could respond by lowering prices on future versions of the A330, putting even more pressure on Boeing to hit the mark with the 7E7. There could be no more important time for the company to make the 7E7 a reality but none when it matters less to the average traveler, said James P. Womack, president of the Lean Enterprise Institute, who has studied Boeing's operations, as well as those of other manufacturers, for years. "The flier can't tell the difference from one airplane to another, no matter how pretty the painting is," Mr. Womack said. "People can tell you if they're riding in a BMW or a Lexus, but they can't tell you if they're riding in an Airbus or a Boeing." http://www.nytimes.com/2003/12/03/business/03jets.html?ex=1071460920&ei=1&en=eb809b1a2e223c65 --------------------------------- Get Home Delivery of The New York Times Newspaper. Imagine reading The New York Times any time & anywhere you like! Leisurely catch up on events & expand your horizons. Enjoy now for 50% off Home Delivery! Click here: http://www.nytimes.com/ads/nytcirc/index.html HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@xxxxxxxxxxx or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@xxxxxxxxxxxx Copyright 2003 The New York Times Company