- The Washington Times - Tuesday, December 16, 2003

SEATTLE — The Boeing Co. will introduce its first new jet design in 13 years, the 7E7 Dreamliner, as it works to regain aircraft leadership from European rival Airbus by pinning its future on a lighter, roomier, more fuel-efficient jet.

The approval yesterday of plans to start constructing the midsize, 210-passenger jet capped a two-day meeting of the company’s board of directors and comes just two weeks after a top-level shake-up forced by an ethics scandal and worries about Boeing’s direction.

The announcement ended an intense rush by other communities to land assembly work for the new jet, which Boeing will build at its Everett, Wash., plant. The 7E7 eventually will come in three models and fly 200 to 250 people up to 8,300 miles nonstop.

The jet can’t be introduced formally until the middle of next year or even enter the market before 2008. But a decision to begin offering it for sale is an important step for a company that has been overtaken by Airbus in the airplane-manufacturing business it had long ruled.

The plane, which would use more composite materials than metal, would weigh less and use 20 percent less fuel than other models. It also would have bigger windows and slightly wider aisles and seats compared with other planes. Boeing would sell the jet as a replacement for the 757 and 767, with greater range to handle long-distance routes.

Boeing had not approved any all-new airplane program since the 777 in 1990. Pressure to commit to the 7E7 had grown since the aerospace giant pulled away from launching the 747X and the Sonic Cruiser in the past three years, while Airbus was pulling even in the commercial airplane market.

New Chief Executive Officer Harry Stonecipher strongly endorsed the building of the 7E7 on his first day in the top post. Mr. Stonecipher said yesterday that he is optimistic about the jet’s prospects.

“We are 10 for 10 in bringing successful planes to market,” he told a crowd of thousands of Boeing workers at a downtown convention center.

Everett was chosen as the building site over Kinston, N.C.; Charleston, S.C.; and Mobile, Ala.

Gov. Gary Locke and the Legislature were determined to win the project, especially since being stunned two years ago by Boeing’s decision to move headquarters to Chicago.

This summer, they agreed to grant the aerospace industry tax breaks totaling $400 million through 2009 — and potentially worth $3.2 billion over 20 years — if Boeing built the 7E7 in their state.

Washington state politicians were jubilant at the news.

“One hundred years ago this week, the Wright brothers launched the Age of Flight,” said Sen. Patty Murray. “Today, we proved that Washington has the right stuff to lead the next century of aviation.”

A plane the size of the 7E7 is in demand, an analyst said, adding that Boeing’s decision probably will boost workers’ morale.

“This is what they needed to do for a very long time,” said Richard Turgeon of Victory Capital Management. “It’s a good thing for the company all around.”

Japan Airlines, reportedly a potential launch customer for the 7E7, remains undecided, a spokesman said.

Boeing made presentations to the airline this fall, and “we have been making our own internal study as we will eventually need replacements for our older Boeing 767 aircraft and Airbus A300 types,” airline spokesman Geoffrey Tudor said in Tokyo. “We have made no decision or commitment on the 7E7.”

Boeing has been battered by bad news since its move to Chicago in 2001, from the global aviation downturn after the September 11 terrorist attacks to recent scandals involving government contracts.

Former Chief Executive Officer Phil Condit resigned Dec. 1 amid a series of ethics scandals in the company’s defense business.

Last month, Boeing fired Chief Financial Officer Mike Sears for unethical conduct, saying he negotiated the hiring of an Air Force missile defense expert while she was still working for the Pentagon and was in a position to influence Boeing contracts. Mr. Sears has denied any wrongdoing.

The company also dismissed the former Air Force official, Darleen Druyun, who was hired earlier this year as vice president and deputy general manager of Boeing’s Missile Defense Systems unit.

The government also withdrew $1 billion in satellite contracts from the company in response to Boeing’s admission that it had information about rival Lockheed Martin Corp.’s bid for the work.

The Pentagon also is reviewing a contract to acquire Boeing 767 refueling tankers that had come under harsh criticism in Congress for its price.

Boeing’s shares gained 73 cents to close at $39.93 yesterday on the New York Stock Exchange. Boeing made the announcement about the new plane after the markets closed.

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