Boeing takes a leap into future with new design

Rather than continue with the development of a bigger derivative of its 30-year-old 747 jumbo jet, The Boeing Co. announced yesterday that it will once again push headlong into the frontiers of commercial aviation and build a revolutionary jetliner that will look and perform like none built before.

As he unveiled an artist's sketch of the strange-looking plane that will cruise above 40,000 feet at just under the speed of sound, Alan Mulally, president and chief executive officer of commercial airplanes, borrowed a line from company founder Bill Boeing:

"Let no improvement in flying pass us by," Mulally said.

Boeing's Sonic Cruiser will be a superfast jetliner featuring a radical new design.
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The radical design has a delta wing near its tail, two engines blended into the back of the wing with smaller wing-like canards near the nose.

Passengers could be flying on the Sonic Cruiser by 2007, Mulally said.

"This is the airplane our customers have asked us to concentrate on," he told a packed news conference at Boeing's commercial airplane headquarters near Renton.

"They share our view that this new airplane could change the way the world flies as dramatically as did the introduction of the jet age."

If Boeing has found a way to make near-sonic speed flight possible at a reasonable cost, the company could have itself an Airbus-killer airplane, one analyst said.

"You will have all the high-margin passengers flocking to the new Boeing plane, leaving Airbus and its A380 hauling backpackers," said Richard Aboulafia, senior aviation analyst with the Teal Group. "This would be a silver bullet, a stake through the heart of the A380 -- if it ever materializes.

"If they really have found a way to make this a reality then more power to them. They will produce a war winner."

Mulally said Boeing will immediately undertake a 777-like development program where airline customers will be involved from the start in deciding final design details, from range to size.

The plane could seat anywhere from 100 to 300 passengers, but as a starting point with airlines, Boeing is looking at a twin-aisle plane that could seat 175 to 250 people, Mulally said. It would be powered by two engines with about the same thrust as those on the 777.

The dramatic move to drop the $4 billion-plus 747X project and focus those resources on the Sonic Cruiser comes only a week after Boeing dropped the bombshell that by the end of summer it will move its corporate headquarters from Seattle to one of three cities far from its commercial roots -- Chicago, Denver or Dallas.

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Boeing is also looking at possibly moving its 737 and 757 airplane production in Renton to Everett, where its twin-aisle 747, 777 and 767 are built.

With so many changes in the works, Mulally was asked repeatedly where Boeing will assemble its new jet. The final assembly site will be determined later, he said. But Mulally added that if the commercial airplanes division can continue to show improvements, "we will earn the right to make it here."

Industry analysts welcomed the news but cautioned that Boeing must now prove it can build a jetliner that will fly at nearly the speed of sound -- about 660 miles per hour at 30,000 feet above sea level -- with the same operating efficiencies as today's jetliners.

"I'd much rather see them do this than the 747X," said Byron Callan, aerospace analyst for Merrill Lynch & Co. who closely follows Boeing.

"It is a very forceful statement that Boeing is still focused on its core business -- building commercial airplanes. It's wonderful to see them thinking in leaps ahead, not iterative thoughts about how to tweak a previous design to improve it."

Callan also said the new plane could give Boeing an edge over the Airbus A380 superjumbo now under development.

"This will really allow airlines to differentiate their service," he said. "There are some very interesting things that they could do with a plane like this. It's a real game changer for me if you can cut that flight time by 15 to 20 percent."

Although the 747X project is dead, Mulally said it could one day be built if market conditions change and customers want it. But after shopping the 747X to airlines for two years, Boeing failed to land a single customer.

Walt Gillette, Boeing's chief engineer who only last year was named to head the 747X project, will now lead development of the Sonic Cruiser.

Although it is giving up on the 747X, Boeing will continue to improve its 416-passenger 747-400. Boeing is already working on a longer-range model for launch customer Qantas. And it plans to install a 777-style interior and cockpit in future 747-400s.

But Boeing is leaving the market to planes bigger than the 747-400 to Airbus and its 555-passenger A380. Airbus has landed 66 orders for the superjumbo, now scheduled to enter service in late 2006.

"It's now clear that both Boeing and Airbus have placed their bets on the table and each is holding very different sets of cards," said industry analyst Peter Jacobs of Seattle-based Ragen MacKenzie.

"It's going to be fun to watch how this develops over the next several years."

Boeing and Airbus disagree about the market for airplanes the size of the 747 or bigger. Boeing believes the market is too small to justify the development an all-new big plane such as the A380, which Airbus has said will cost about $11 billion to develop.

Mulally would not disclose the expected development costs of the Sonic Cruiser, but industry analysts believe it will take $8 billion to $10 billion.

Because markets have fragmented, allowing airline passengers to fly direct routes between cities and bypass the large hub airports served by the 747 and eventually the A380, Boeing believes airlines will want smaller, faster planes such as its Sonic Cruiser.

The world's fastest subsonic commercial jetliner operating today is the 747-400, which cruises at about mach .85. (Mach 1 is the speed of sound, which varies depending on temperature and height above sea level.) Boeing's new jet would cruise at .95 or faster.

Compared with today's jetliners, the Sonic Cruiser will save about one hour for every 3,000 miles flown, according to Boeing.

That could mean cutting an hour off flights across the United States, or about two hours on trans-Atlantic flights.

"Customers and airlines will have some interesting choices to make," said Jacobs, the industry analyst.

"Do customers want to travel in a very large plane with 600 other passengers from one busy airport hub to another, or do passengers want to travel point-to-point in a faster plane.

"I think passengers want to go from their point of origin to their destination as fast as possible. As long as customers can do that for about the same price, it's pretty much a slam dunk for Boeing."

Mulally said the Sonic Cruiser will have "similar" operating costs to today's jetliners.

Airbus doesn't believe that's possible.

John Leahy, Airbus senior vice president and chief marketing officer, was asked about Boeing's proposed Sonic Cruiser yesterday during a presentation to Wall Street analysts and investors in New York.

He was quoted by Reuters as saying that Airbus looked at such a plane and found it would burn about 40 percent more fuel and have a significantly higher operating cost per seat than today's jets.

In an interview yesterday with the Post-Intelligencer, Mike Bair, vice president of business strategy and development for Boeing Commercial Airplanes, acknowledged the Sonic Cruiser will burn more fuel than today's commercial jets.

"But it's only a little bit of a fuel penalty," he said, adding that the higher fuel burn will be offset by a plane that can get to its destination more quickly.

Airlines with which Boeing has discussed the plane are not that concerned, he said.

It was only in the last month or two that Boeing began talking in detail with top airline executives about the Sonic Cruiser, Bair said. They were all asked what plane they would like to see Boeing develop -- the 747X or the Sonic Cruiser.

"We essentially let them pick," he said.

Boeing will soon hold meetings with about a dozen key airlines from the United States, Europe and Asia to begin focusing on what they want in the Sonic Cruiser, Bair said.

Some have already indicated they see a plane initially serving mostly business and first-class travelers.

"Clearly, the initial focus that I think all airlines will have is to put this plane on high-yield routes," Bair said.

"If you are a business traveler with a business-class ticket, do you get on a slow plane or a fast one? That's a no-brainer. All business travelers will line up for the fast one. So that's exactly what the airlines are thinking. The first one to market with one of these planes will suck up all the premium traffic until there are more out there."

Mulally said passengers will not have to pay the high fares like those who flew on the supersonic Concord. Asked if economy-class passengers will be able to afford to fly on the Sonic Cruiser, Mulally replied it will be "absolutely affordable to all."

Analyst Aboulafia said he is not convinced Boeing's Sonic Cruiser can perform as economically as the company claims.

There's a reason today's commercial jetliners fly at around mach .80 to mach .85. he said. Above that speed and operating costs rise exponentially.

"You can't change the laws of physics," he said. "Boeing has to figure out a way to say that 15 or 20 percent more speed is only 15 to 20 percent higher costs. But that violates all we know about air transports. Has Boeing found a way?"