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Boeing taking orders for 7E7

Boeing's new 'Dreamliner' is due to enter airline service in 2008.
Boeing's new 'Dreamliner' is due to enter airline service in 2008.

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SEATTLE (Reuters) -- Boeing Co. says it will begin booking orders for the 7E7, a major step toward launching its first new jetliner in a decade.

The mid-sized wide-body 7E7, to be known as the "Dreamliner" is due to enter airline service in 2008.

The aircraft is designed to save airlines money on fuel and operating costs and help Boeing claw back sales from bitter rival Airbus.

Boeing said Tuesday the 200- to 250-seat 7E7 will be built in the Seattle suburb of Everett, Washington, home of Boeing's other wide-body jets, ending months of speculation that the work might go elsewhere.

Giving its Seattle-based jetliner unit permission to book orders shows Boeing's increasing confidence that the twin-engine 7E7 will be officially launched.

The steep price of developing the 7E7, which Boeing has not disclosed but experts have pegged at about $10 billion, is putting added pressure on the manufacturer to get it right.

"This is a capital-intensive business and this aircraft is a gamble, but it's a smart gamble," said John Murray, an analyst who covers Boeing for Delaware Investments, which owns Boeing shares. "If they didn't do it, Airbus would be standing alone in this business in 40 years."

Without the 7E7, analysts say Boeing would be relegated to also-ran status in the two-horse race with Airbus, which has become the world's most prolific jetliner maker with a backlog of 1,467 jet orders compared with Boeing's 1,112.

Airbus officials have called the 7E7's improvements over Boeing's current jets minor, saying price discounts on the competing A330-200 could eliminate any advantage the 7E7 might bring for airlines.

"When Airbus says they are going to offer discounts, they are already admitting theirs is an inferior product," said Randy Baseler, vice president for marketing at Boeing's commercial jet unit.

Airbus Chief Commercial Officer John Leahy said the A330-200 would beat the 7E7 and win at least half the 1,800 jet orders expected for mid-sized jets over the next 20 years, expressing surprise that Boeing would spend so much money just to match the A330.

"If the question is: If they bring out the 7E7 what are we going to do, the answer is nothing. We are very content to stay with our A330-200," Leahy told Reuters.

The 7E7 would replace the slow-selling 757, which Boeing is discontinuing, and the 767 line, which has slowed to just one aircraft per month to sustain production until a controversial order for 100 U.S. Air Force fuel tankers is finalized.

Shares of Boeing gained 73 cents, or 1.9 percent, to close at $39.93 Tuesday on the New York Stock Exchange. Shares of European Aeronautic Defence and Space Co., which owns 80 percent of Airbus, fell 3 percent in European trading.



Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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