Posted on 07/31/2004 4:14:40 PM PDT by BenLurkin
Cutting costs has become an obsession for major carriers worldwide. Nowhere is that more true than in the U.S., where big airlines closed out July with a second-quarter loss of $2.1 billion, as they continued to battle rising costs. While foreign carriers tend to be in better shape, the industry knows the key to survival lies in being lean and mean.
If only carriers could get their hands on a Boeing 7E7 now. Experts say the plane, which will go into service in 2008, could redraw airline economics. Much has been said about the 7E7's fuel-sipping nature. But Boeing Co. (NYSE:BA - News) is luring carriers with other potential cost savings, too. And thanks to more efficient factories, it aims to build each 7E7 in half the time it takes to crank out a widebody jet. That would get new planes to carriers faster when demand surges. "The 7E7 is a significant step forward for the economics of a plane," says Peter Gardner, vice-president for technical issues at Cathay Pacific Airways Ltd.
While U.S. carriers are not in a position to buy new planes now, Continental (NYSE:CAL - News), American (NYSE:AMR - News), and Northwest (NasdaqNM:NWAC - News) have all shown interest in the 7E7. Meanwhile, foreign carriers have ordered 62 7E7s, and Boeing expects 200 more orders by yearend. And while strong defense sales helped the company post second-quarter income of $607 million on $13.1 billion in revenues, reversing a year-ago loss of $192 million, Boeing is hiking its 2005 earnings forecast thanks to renewed strength in its commercial business. Says Boeing Commercial Airplanes CEO Alan R. Mulally: "We feel good about where we're going."
So will Boeing deliver? Much depends on getting its new manufacturing process right. In the 1990s, Boeing ramped up hard after putting in place a supposedly more efficient system -- with nearly catastrophic results.
This time, key suppliers believe Boeing will do better because it has been improving the work flow in its factories. "Nothing like a near-death experience to change bad habits," says Richard Aboulafia, an aerospace analyst at Teal Group. "Boeing's factories are more efficient than at any time in its history." Indeed, Boeing has cut the final assembly time of a 737 in half, to 11 days; Airbus has only been able to reduce its A320 final assembly from 40 days to 24.
With the 7E7, Boeing aims to work even faster. Suppliers will build huge chunks of the fuselage, which -- in a break with the past -- will be packed with plumbing, electrical systems, and computers before being shipped to Seattle for final assembly. By outsourcing more of the manufacturing, Boeing aims to build a 7E7 -- from start to finish -- in four months, rather than the traditional 12. The strategy, though, carries logistical risk, since it relies heavily on suppliers. Still, most analysts believe Boeing has established a sufficiently strong relationship with its partners.
Cheaper To Fly If Boeing can build its plane faster, carriers stand to benefit. Typically, by the time airlines take delivery of a new plane, they must reconfigure the interior because the market has changed. That's expensive: It once cost Cathay $1 million to shift a toilet three inches on one 747. "If you cut the delivery time in half, you can respond to market changes and avoid costly interior makeovers," says Gardner. Carriers also like how the plane could help cut costs and lift revenues. The plane is expected to be 10% cheaper to operate. Its composite fuselage won't require checking for cracks, which costs $2 million to $4 million per plane for aluminum jets. And its 20% better fuel economy will allow airlines to carry cargo on longer flights, a potential revenue-booster.
Boeing still faces plenty of challenges. Airbus says it will respond with an improved or new A330, which will closely match the 7E7's operating costs. Boeing also will have to manage a whole new way of building planes. And with delivery three years off, airlines have time to see if Boeing can hit its performance goals. But if it does, the 7E7 could be the best news the industry has had in years.
bump
"Its composite fuselage won't require checking for cracks..."
Ummm...do me a favor. Check for cracks, anyway.
LOL!
Ummm...do me a favor. Check for cracks, anyway.
Very funny!!!
They will, NDI will not go away.
I'm sorry. . .NDI = Non Destructive Inspection. Done with sound, x-ray, thermal, and a few other methods that this non-engineer mind can't understand.
Point is, composities are strong and light and with the new technology, easily maintained and repaired.
That's true. If they fly one into Fairbanks in February they might find cracks all over it like our cars' plastic seatcovers and trim.
John Kerry will probably buy planes from France (Airbus).
That's true. Wind chill is a different problem. Parts of the airframe could be exposed to extreme low pressure that might suck heat down to way below.
>>Airbus says it will respond with an improved or new A330<<
What will the improvement be? It actually stays airborne?
And subject to catastrophic failure...
The composite tail won't fall off...
The new Airbus has a special feature whereby it will automatically dump it's waste products when confronted with turbulence.
1. Lighter weight = lower fuel costs (engines don't have to work as hard to move the aircraft which means less fuel used)
2. Lower maintenance costs (cost of carbon repairs versus cost of metal which corrodes, cracks, etc. more often than carbon will deteriorate)
Fuel and labor are the big ticket items that you pay for when you fly. Cutting them back might reduce costs, or increase profits which will create jobs, security, etc.
I seem to recall reading that the 7E7 is still significantly overweight, such that Boeing might have to take some contractual penalties for it if they can't get it down further.
The article you're referring to was regerding the weight of the new Airbus A380 being 14 tons over design.
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