The Seattle Times Knight Ridder/Tribune Business News
Mar. 30--After more than a year of fruitlessly peddling a superjumbo jet it knew wouldn't be a big seller, Boeing is shifting its focus -- and investment dollars -- to a superfast plane whose potential demand remains unknown.
In doing so, Boeing is finally targeting what it sees as an increasingly fragmented air-travel market, one in which passengers want to fly direct to more sets of destinations and bypass major airline hubs.
Boeing yesterday unveiled plans for a radical new airliner that would fly at near-sonic speed and would bear scant resemblance to any current Boeing jet. Boeing characterized the aircraft, which would fly faster, go farther and climb higher than any commercial jetliner now flying, as a milestone akin to the jump from propellers to jet engines.
Executives said they hope to have the plane ready to fly by 2006.
But many questions now face Boeing: whether such a plane is physically feasible, whether Boeing is serious about building it, whether the new plane would cannibalize sales of existing models, and whether the company could spend the research money without angering shareholders, who are demanding higher profits.
'The question is, can it be done and can it be done for a reasonable amount of money?' said Richard Aboulafia, an aerospace analyst at the Teal Group, a consulting firm in Arlington, Va. 'It's like Scotty said on `Star Trek': `You can't change the laws of physics!' '
Many details of the new plane aren't yet known, including whether it would be built in the Puget Sound area. That decision, along with what kind of 'collaboration' Boeing might strike with contractors and suppliers, will be made later as the program progresses, said Alan Mulally, chief executive of Boeing Commercial Airplanes. Executives also declined to estimate development cost.
Analysts suggested one possibility for collaboration would be for Boeing to offset costs by developing the plane with a partner such as General Electric, which could put up the research money for the engine.
Instead of Boeing's traditional center-mounted wings, the Sonic Cruiser would sport triangular delta wings more reminiscent of fighter jets than passenger planes. The aircraft's twin engines would be in the rear instead of the more familiar location, attached to the wings outside the coach-cabin windows.
Just as unusual, the jet would feature 'horizontal stabilizers' in the front part of the fuselage behind the cockpit. Those would help make the flight smoother at higher altitudes, Mulally said. The plane likely will have two aisles.
'The real innovation of this airplane is the configuration,' Mulally said, showing off an image of the Sonic Cruiser for the first time at a news conference at Boeing Commercial Airplanes headquarters, at the former site of the Longacres racetrack near Southcenter.
The jet would be Boeing's first all-new plane since the popular 777 entered service in 1995.
Japan Airlines, which operates Asia's largest commercial-aircraft fleet, said today that it's interested in Boeing's new project, according to Bloomberg News.
'The concept of a higher-speed, medium-size transport aircraft with about 250 seats has great appeal,' said Japan Airlines spokesman Geoffrey Tudor. 'We haven't heard more details from Boeing about the new design, but we find the concept very interesting.'
Even if it is never made, the plane could succeed in at least putting pressure on Airbus Industrie, Boeing's chief rival. The faster jet potentially changes the economics of the airline business, letting carriers charge higher ticket prices and fill planes with high-margin customers. The new model might steer customers from Airbus' new superjumbo, the A380, which offers essentially the same profit margin as the 747. It also could keep Airbus from raising A380 prices, since that would make the Sonic Cruiser more attractive.
The Sonic Cruiser also gives Boeing the technological lead. While Airbus works on building a plane that essentially matches the 747, Boeing 'has spent this past time focusing on speed,' said Heidi Wood, an analyst at Morgan Stanley Dean Witter in New York.
'It certainly raises questions about the balance of power between Airbus and Boeing at the end of the decade.'
The jet would cruise at speeds of up to Mach 0.98, or about 740 mph, depending on altitude. That's 98 percent of the speed of sound and faster than any jetliner except the supersonic Concorde. Boeing's 747-400 jumbo jet is currently the second-fastest jetliner with a speed of Mach 0.85, or about 650 mph.
Leo Mullin, chief executive officer of Delta Air Lines, said the plane would represent 'a very significant additional option' for aircraft choices. He said the Atlanta-based carrier had been briefed by Boeing on the Sonic Cruiser but would need much more information before deciding whether to purchase one.
According to Boeing's data, the Sonic Cruiser would shave 15 to 20 percent off current flight times.
'On a 14-hour trip to Asia, 20 percent is three hours,' Mullin said. 'That's a very significant savings.'
Boeing's confidence in the project suggests it has found promise in its initial work, and executives are talking about it with a passion they never showed for the 747X.
Boeing Chairman Phil Condit's enthusiasm was palpable at a meeting with analysts last week in Seattle.
'He was like a kid,' said Wood, who sat next to Condit at lunch. 'It's the most animated I've seen him.'
Scott Hamilton, a Seattle aviation consultant, said almost any airline that flies long domestic routes or trans-Atlantic or trans-Pacific routes could be a potential customer for the Sonic Cruiser.
The trouble is, Boeing's 757, 767 and 777 have various models that match the Sonic Cruiser's seat capacity. The key for Boeing would be to siphon sales from Airbus' competing A330 or A340 or the smaller A320 without stealing business from its own jet models.
In chasing after the market for a super-fast and super-long range jet, Boeing is abdicating a segment of the superlarge jet market to Airbus. Boeing yesterday confirmed that it has halted development of the 747X, a 500-seater jet that was its answer to Airbus' mammoth new A380. Boeing had been unable to land any customers for the 747X and lost coveted orders from Singapore Airlines and Qantas Airways of Australia to the A380.
Boeing had always insisted that the potential for sales of planes the size of the 747X and bigger was limited. But Boeing acknowledged yesterday that despite its best marketing efforts, demand for the 747X was virtually nil.
'The only thing we could have done more aggressively is give it away,' said
Mike Bair, Boeing's vice president of marketing management for airplane programs.
Boeing executives had always been lukewarm about the 747X's market potential. But they also had insisted earlier this month that they were serious about launching the program. Prospective 747X customers had been bluntly questioning Boeing's commitment to do just that.
The 747X would have been a bigger version of the 747 jumbo plane, which entered service in the late 1960s. The new edition was to have new wings and engines and updated interiors, but the fuselage was to remain essentially unchanged.
Joe Sutter, a former Boeing engineer and now a consultant for the 747X, said the company could not overcome the slowdown in the world economy -- or the aggressive discounts that Airbus was offering for its A380. Sutter, who is called the father of the original 747, contends that Boeing isn't forgoing any 747X sales by putting the program on the back burner. That's because the market for very big planes is small, and Airbus has it pretty much cornered, Sutter said.
Walt Gillette, who had been managing the 747X program, will lead the fast-speed jet program.
Boeing also said it would slow development of a longer-range version of the so-called 767-400 ER, which would have carried 245 passengers on flights of up to 7,000 miles. Boeing had pledged to deliver the first long-range 767-400ER by spring of 2004. Boeing said current 767-400 airline customers have said that additional range would not be needed.
Condit said the Sonic Cruiser is a logical evolution in aviation, much like the shift from propellers to jets. Boeing projects that passengers increasingly will prefer to bypass big hubs and fly directly to their destinations on smaller jets.
Boeing's rival, however, wasted no time speculating that the Sonic Cruiser would have only limited market appeal. John Leahy, Airbus' chief marketing officer, claimed that the jet would burn 40 percent more fuel and thus cost more to operate.
Hamilton said Airbus has its hands full with the A380, 'which is why they are dissing' the Sonic Cruiser.
But just as Boeing was wrong to question the market for the A380, Airbus is wrong to dismiss Boeing's latest proposed jet, Hamilton believes.
'I think the Sonic Cruiser is a very exciting concept,' he said.
Asked during an interview how Boeing could gauge the new airplane's market potential any better than it had with the 747X, Condit replied, 'How can you be sure? You can never be sure.'
By Kyung M. Song and Alwyn Scott
THE SONIC CRUISER
What: a proposed Boeing airliner that would be the fastest airplane ever built by the company.
Capacity: 100 to 300 passengers.
Maximum speed: Mach 0.98 (740 mph), about 20 percent faster than current commercial jets.
Maximum flight distance: about 10,400 miles.
Maximum cruising altitude: above 40,000 feet, or 10 percent higher than existing airliners.
Timeline: It could be flying by 2006.
Breakthrough: Boeing cited the powerful, economic engines developed for Boeing's 777 as the breakthrough that made the Sonic Cruiser possible.
Unknowns: development cost, list price.
Biggest unknown for Puget Sound: where it will be built.
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(c) 2001, The Seattle Times. Distributed by Knight Ridder/Tribune Business News.
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