Asian Economic Rebound Boosts Boeing Rebound

Asian Aerospace 2000 -- A solid, profitable year behind it, Boeing plans continued improvement in its operating efficiencies during 2000 - and may introduce some new airplanes.

Compounding its good 1999 operational and financial results, Boeing's key Asian market appears to be "back on track", according to Larry Dickenson, senior vice-president for the company's commercial airplanes group. "Despite some hiccups, the entire region is recovering," he said. Boeing forecasts predict that the Asia Pacific aircraft market will pass Europe's in size within a few years.

Dickenson also used his visit to Asian Aerospace 2000 to criticize a recent Airbus advertising campaign as "scare tactics". The ads played up the advantages of having four engines-vs-two during long, overwater flights. Such claims are untrue and unduly alarm passengers, Dickenson said. "Airbus seems to believe ETOPS is only good on the AtlanticIt must be coincidence" that the twin engine Airbus A330 doesn't have trans-pacific range, he said.

During 1999, Boeing delivered a record 620 transports and successfully overcame production difficulties and parts shortages that slowed deliveries the year before, Dickenson reported. Although planned production for this year has dropped to 490, the company's commercial aircraft organization will produce a higher profit margin, he said.

Increased profits make it easier for the company to fund and introduce new aircraft, derivatives and services. Boeing continues to work with customers on defining the 777-200X and -300X. The former will have 301 seats and a range of 8,800 nmi, while the latter will seat 359 and have a 7,300 nmi range. Boeing should launch at least one version of the 777X by mid-year, according to top company managers. Dickenson said he highly doubts Boeing will offer a further stretch of the aircraft.

Boeing also continues to work on two new versions of the 747-400, Dickenson noted. The first would be an ultra-long range version capable of flying 430 passengers up to 8,700 nmi. The other would feature a stretched fuselage accommodating 500 seats and have a 7,800 nmi range. Both versions would offer high commonality with existing 747-400s, of which over 500 have been delivered.

Unfortunately, airlines are telling Boeing sales staff they don't need bigger airplanes yet, Dickenson said.

Boeing put a bright face on Airbus' 55% market share dominance of new transport sales last year. Since 1996 Boeing has delivered 70% of all commercial jet transports over 100-seats in size, Dickenson said. Through 2000, the Seattle-based aerospace manufacturer will deliver 67% of all units in the same category. The company also won orders sufficient to guarantee a two-per-month production rate of its flagship 747-400.

Milestones during 1999 included certification and first deliveries of the 100-seat 717. The stretched 757-300 also entered service and the 767-400 accomplished its first flight and began flight testing. The 500th 'next-generation' 737 is due to be rolled out next month.

Boeing believes its product line is well-positioned for the future. The new 757 and 767 derivatives offer extremely low seat-mile costs. The 777 and 'next-generation' 737 also are selling well. All of these aircraft are in the hot single and intermediate twin aisle category. Boeing forecasts these segments will be responsible for 88% of all new transport deliveries - and worth over $412-billion in sales - by 2009.

The recent decision by prestigious Singapore Airlines to purchase more twin-engine 777s and trade-in its A340-300s was primarily due to "passenger preference", Dickenson said. The 777's appeal should further be increased by FAA's decision to grant limited 207-minute Extended Range Operations (ETOPS) authority to qualified airlines operating the huge twin.

Boeing believes intermediate twins such as the 777 are leading the way in market fragmentation, or the trend to long-haul, non-stop flights that overfly hubs. As such, there is no business case to build a new 550-seat superjumbo like the A3XX, the company claims.

By Paul Proctor