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Boeing Boss Doesn’t Regret Killing Big Jet Cost Of Developing Super 747 Was Close To $3 Million A Day

Anthony Effinger Bloomberg News

Ron Woodard, president of Boeing Co.’s Commercial Airplane Group, said he has no regrets about dropping out of the race to develop 550-passenger jetliners.

Boeing’s costs to develop larger versions of its 747 jetliner were approaching $3 million a day when the company decided to kill the project, Woodard said.

“I only regret that we didn’t do it sooner,” Woodard said in a Bloomberg Forum interview. “The costs associated with building the airplane just couldn’t justify going ahead with it.”

Total expenditures were expected to rise as high as $7 billion, the Seattle-based company said late last year.

Boeing, the world’s largest maker of commercial aircraft, had about 1,000 engineers on the project who will now be available for other work. Woodard said Boeing will concentrate on developing larger, longer-range versions of smaller 767 and 777 models. Airbus Industrie, the European consortium that is Boeing’s only remaining competitor in the jetliner market, is still going forward with its plans for a very large jetliner. The two companies have long disagreed on the number of such big jetliners the world will need. Airbus expects airlines to buy about 1,300 of them, while Boeing saw a market for 550.

Airbus has a “flawed view of the marketplace,” Woodard said. The difference in the two estimates, Woodard said, is that Boeing expects the airlines increasingly to fly smaller aircraft between smaller cities, avoiding the crowded airports in Tokyo, London and Hong Kong on routes with enough traffic to justify using planes that hold more than 500 people.

“You’ll see hubs being bypassed (in the Pacific) more frequently, like they are in the North Atlantic,” Woodard said.

The 747 was once the plane of choice for flying across the Atlantic. Now, most of those flights are being made by the smaller Boeing 767s and Airbus A330s. Instead of flying to large airports and changing planes, more passengers fly point-to-point.

Woodard said he expects to see another year of strong orders for Boeing in 1997.

Boeing’s orders for new aircraft almost doubled to a record $53 billion in 1996, giving it almost two-thirds of the jetliner market. The company took orders for 717 new aircraft last year, compared with 346 in 1995.

New orders this year will come from all over the world, Woodard said, including China.

Orders from that nation, which is one of the fastest-growing markets for air travel, slowed in 1996 as trade relations between the U.S. and China soured. Boeing blames the bad blood for China’s decision to buy $1.5 billion in Airbus aircraft.

“I don’t see big orders of hundreds of planes (from China), but I think we’ll see a substantial level of order activity” unless trade relations worsen again, Woodard said.

Woodard said Boeing is managing to control costs as it boosts production to meet orders. The company hired 20,702 people in 1996, bringing its work force to 125,822 worldwide. Most of its workers are in Washington state.

Boeing added another 21,000 employees when it bought Rockwell International Corp.’s defense and space assets for $3.2 billion. The purchase closed in December.

“This year, you will see very modest levels of hiring,” Woodard said.

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