Boeing’s Decision of the Decade: Does It Build the 797?
Airbus says it can expand the A321 or some may want its A330 NEO - the Boeing design could be a lot more advanced.
Excerpt
“Every single other Boeing jet has been pretty much a guaranteed home run, even if it wasn’t clear at the time,” said aerospace analyst Richard Aboulafia. “This is different. They’ve got to be careful with this.”
Boeing’s board is expected to review the case for the new program by the end of March, according to people briefed on the matter. For now, the team spearheading the concept, led by former 787 program head Mark Jenks, has been meeting monthly with Chief Executive Officer Dennis Muilenburg and Chief Financial Officer Greg Smith.
The sales force has been fine-tuning the design with airlines for at least five years, creating a “will it or won’t it?” drama around the decision on whether to make the plane, known internally at Boeing as the NMA, for new, middle-of-market airplane.
“With some planes, the technology is the ‘moonshot’; with this, it’s the business case,” Aboulafia said. The word “moonshot” is the term Boeing uses for quixotic gambles that it has vowed to avoid after loading the 787 Dreamliner with groundbreaking technology and an unproven production system—then losing money on the first 500 or so planes after extensive delays.
For Boeing and Airbus, committing to an all-new aircraft is a once-in-a-decade event. Costs are prohibitive, delays are the norm and payoff can take years to materialize. Boeing could easily spend more than $15 billion on the NMA, according to Ken Herbert, analyst with Canaccord Genuity, and Airbus may be forced into a clean-sheet design if sales take off.
Airline entrepreneur David Neeleman underscores the potential rewards, and risk, for Boeing. The NMA seems tailor-made for the networks he is weaving together between the Americas and Europe with affordable, yet comfortable flights that skip congested hubs.
“I had a briefing from Boeing and I thought it was great,” Neeleman said during a recent visit to Chicago to tout Portugal’s TAP airline, one of his holdings. That’s noteworthy, coming from an executive who has mostly favored Airbus jets at startups such as JetBlue Airways Corp., Brazil’s Azul SA and Moxy, the code name for his latest U.S. project.
Unfortunately for Boeing, Neeleman is also impatient for Airbus to speed up a cheaper alternative. “They should be at a lot bigger head start,” he said of the Toulouse, France-based aerospace giant.
It’s a hint of the dynamics that can spoil aircraft bets that sprawl over decades. The sales appeal for a plane family overlapping Boeing’s largest
single-aisle, the 737 Max 10, and smallest wide-body, the 787-8, is just one question mark.
Another is how much savings the company can reap from a new manufacturing system. Muilenburg is increasingly confident Boeing can shave time and money from development and final assembly through new digital tools that anticipate and track how the plane is built, and then monitor how it is flown.
The plane-maker’s new military training jet hints at the breakthrough it sees for the NMA. For Boeing’s Super Hornet fighter, factory workers in St. Louis need 1 ½ days to rivet together the two main fuselage sections. On the new T-X trainer, the components are joined in less than an hour, said Leanne Caret, Boeing’s defense chief.
If Boeing hesitates, Airbus will woo its customers with capable, if not cutting-edge, jet upgrades.
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