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Saturday, December 21, 2002 - Page updated at 12:00 AM

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Boeing pins hopes on its third strategy in less than two years

Seattle Times aerospace reporter

Boeing's jet of the future has its third new look in less than two years. But the company's commercial-airplanes chief says this time he's more confident the company is on the right track.

Alan Mulally yesterday confirmed Boeing is dropping its space-age Sonic Cruiser design for something a lot less sexy — a conventional plane that will look like a smaller version of the 777 and go the same speed.

But hiding under the familiar shell will be new lightweight composite materials, avionics and engine technology that will greatly reduce the plane's weight. It will burn up to 20 percent less fuel and provide the substantial cost savings financially-struggling airlines need, Mulally said.

Many of those technologies were developed for the Sonic Cruiser program, and Mulally said nearly all the advances in aircraft design and production processes that have come out of that program will be applied to the new plane.

As evidence, said Boeing spokeswoman Lori Gunter, all the technology partners recruited to the Sonic Cruiser program will continue to work with Boeing on the "super-efficient" aircraft. Nearly all of the nine companies recruited to date specialize in composite materials that would have been used throughout either airplane. More partners will be announced next month, she added.

Boeing thinks the new plane will eventually replace Boeing's slow-selling 757 and 767 models, as well as a host of other aging midsize planes such as the Airbus A300 and A310, the Lockheed L1011 and the McDonnell-Douglas DC-10 and MD-80.

"(The airlines want to) replace all these older airplanes in the middle of the market, and when they do it, make it really efficient," Mulally said.

He predicted Boeing could sell 2,000 to 3,000 over the life of the new jet. By comparison, over the last 24 years, Boeing has sold nearly 1,987 757s and 767s.

The so-called "super-efficient" plane will be the company's third new product focus in less than two years. In 2000, Boeing was trying to market a stretched version of its 747, called the 747X, to compete against the planned Airbus A380 super-jumbo jet.

But the 747X never found a buyer, so on March 29, 2001, shortly after announcing its headquarters move to Chicago, Boeing dropped the 747X in favor of the Sonic Cruiser.

Beaming next to an artist's rendering of the futuristic plane in March 2001, Mulally proclaimed the new jet "could change the way the world flies as dramatically as did the introduction of the jet age."

But then came the recession, Sept. 11, 2001, attacks and the airline industry's financial crisis.

Yesterday, Mulally said Boeing's change in direction was based on unequivocal guidance from the world's airlines that they want a cheaper plane rather than a faster plane. "I am more confident than ever over the last three or four years that this is exactly the next new airplane we ought to make," he said.

Mulally's confidence aside, Boeing will not commit substantial resources to the as-yet unnamed "super-efficient" plane for some time, leaving the company the flexibility to switch gears once more if airlines' needs change again.

"With a 2008 delivery, we don't start spending the big (development) dollars for two or three years," Mulally said.

Boeing's biggest customers are clearly in no shape to finance a new plane model now anyway. More than 2,000 jets have been mothballed, and with United Airlines and US Airways in bankruptcy and most other airlines struggling, the U.S. fleet will continue to shrink.

Until supply is better matched with demand, Boeing will not grow again, Mulally said.

The bulk of the early engineering work on the super-efficient plane will be done in Everett, but just as Boeing refused to promise to build the Sonic Cruiser in the Puget Sound area, Mulally said the super-efficient plane also could be built out of state.

"It would absolutely be a possibility if we can't figure out how to do it here competitively," he said.

Boeing has repeatedly complained about unfavorable business conditions in the Puget Sound area, particularly the clogged highways.

Looking back on 2002, Mulally said high points included the successful negotiation of new labor agreements with the company's two largest unions and the rollout of the 777-300ER, which he predicted would eventually replace hundreds of aging 747s.

He dismissed reports that Boeing might combine its 747 and 767 production on one line in Everett, saying the two planes were too different to recoup significant savings by such a move.

He said Boeing still expects to deliver 275 to 285 jets in 2003 and 2004, and expressed optimism that the worst of the recent crisis is over.

"It all depends on how safe we keep the world, how fast we get the traffic coming back and how quickly airlines can repair their balance sheets and balance capacity with demand," Mulally said. "Hopefully with where we are, we are at the bottom of this cycle."

David Bowermaster: 206-464-2724 or dbowermaster@seattletimes.com.

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