Boeing’s big on its 737

Published 8:13 pm Wednesday, February 6, 2008

EVERETT — This was supposed to be the year of the 787.

But the 8’s didn’t play out the way the Boeing Co. had hoped, pushing the jet’s delivery into 2009. On Wednesday, the company’s head of commercial airplanes dubbed another aircraft, the single-aisle 737, as the “product of the year,” particularly among U.S. airlines.

On the tails of a record sales year with 1,413 jet orders, Boeing’s Scott Carson isn’t expecting a repeat of 2007. But rising fuel costs will pressure carriers to update their fleets with more fuel efficient jets — such as Boeing’s 737 or its 787, Carson said.

“It creates a market opportunity for us,” Carson, president of Boeing Commercial Airplanes, said while speaking at an aerospace and defense conference in New York.

Boeing workers in Renton continue to turn out the company’s bread and butter jet: the 737. Although Boeing expects to have the 737’s replacement in service by 2015, demand for the narrow-body jet remains strong. The 737 broke a sales record in 2007 with 846 net orders.

Carson anticipates 737 orders from U.S. carriers, such as Alaska and Delta airlines, which still operate MD-80 jets. More than 1,100 aircraft were delivered over the life of the MD-80, which first entered service in 1983. Carson estimates at least 500 of these planes remain in service.

American Airlines credits the MD-80 with allowing the carrier to “rapidly expand its route system and fleet.” Within 13 years, from 1984 to 1997, American’s fleet of aircraft grew from 244 to 649. Roughly 250 of the carrier’s jets were MD-80s a decade ago.

But high oil prices mean that fuel makes up about 30 percent of airlines’ operating costs. At some point, airlines operating these older planes will have to order jets that are more fuel efficient, such as the 737, to be profitable, Carson said.

Despite an upswing in demand for the 737, Carson said Boeing remains cautious about increasing the jet’s production rate too quickly. Boeing has its battle scars from trying to boost rates too rapidly during the 1990s. And its troubles with the 787 supply chain have taught the company to be mindful of what its suppliers can do.

Carson will have that history, current demand and the 737 sales forecast in hand when he makes up his mind in a few months on a production increase. “It feels like there might be enough solid demand to do it,” he said.

Even with its delays, the fast-selling 787 Dreamliner still will be a top seller in 2008, Carson predicted. The jet, made mostly of composite materials that make it lighter and more fuel efficient, has won more than 800 orders already. Initially slated to be delivered to All Nippon Airways of Japan this May, the first Dreamliner has fallen nearly a year behind schedule.

Last summer, Boeing’s global partners struggled to send fully completed sections to Everett, leaving workers here to sort out the pieces. The company underestimated its ability to fix the problems, which led Boeing to thrice push back significant milestones including the 787’s first flight.

In announcing its latest setback last month, Boeing refrained from giving a detailed schedule for the 787. However, officials for the Chicago-based company say they hope to have the 787 in the air by the end of June. Boeing won’t deliver the first Dreamliner until sometime in 2009.

On Wednesday, Carson said that the supply chain is sorting itself out. Most major sections for the second 787 scheduled for delivery next year will be in Everett by next week. And some 787 partners already have work done up to plane number 17, giving Carson “great confidence” that the latest schedule will stick.

Also on Wednesday, Boeing announced that it entered an agreement with India-based TAL Manufacturing Solutions Ltd., a wholly owned subsidiary of Tata Motors Ltd., to build 787 floor beams. The parts will be built in Nagpur, India, and then transported to Boeing partners in Japan, Italy and the United States for further assembly.

“The Boeing-Tata partnership is strong and growing, and forms an important part of our ongoing efforts to strengthen both our presence in India and our strategic relationships with Indian industry,” said Ian Thomas, president, Boeing India.

Reporter Michelle Dunlop: 425-339-3454 or mdunlop@heraldnet.com. For more aerospace news, see her blog at cmg-northwest2.go-vip.net/heraldnet.