Boeing is back! (page 1 of 4)

The Boeing Company, one of the titans of the aerospace industry, has had to handle a lot of turbulence over the last couple of years. Ethics scandals and poor performance on big-ticket military projects that have soured relations with the US Department of Defense, on whom it depends for much of its business, have hurt the company's image and its bottom line.

So it was a big shot in the arm on April 26th, when the Chicago-based company launched its new 7E7 Dreamliner passenger jet with a hefty 50-plane order from All Nippon Airways (ANA), Japan's second biggest airline, worth up to $6 billion, the biggest initial order ever for a new-model commercial jet.

After two years of layoffs that cost thousands of jobs as the demand for passenger jets shrank alarmingly, Boeing's commercial airplanes division was back in the game. The mid-sized 200- to 300-seat Dreamliner is the first new US passenger aircraft to be built since the 777 was launched in October 1990 and will have to do battle for commercial air supremacy with the 550-seat A380 double-decker superjumbo manufactured by Boeing's main rival, Europe-based Airbus.

The ANA order was valuable in another way: the airline will phase out its older A320 Airbuses and leave Boeing its sole supplier of narrow-body jetliners. The stakes in the multibillion-dollar dogfight are high, since the two manufacturers are sinking $8-15 billion each into the new designs, which show their radically different approaches to the airline market of the next few decades.

First deliveries of the 7E7 - the "E" stands for efficiency - are scheduled for 2008. But the A380 has the jump on its rival. The flying behemoth, which will be the world's largest passenger plane, will be making its debut in Singapore Airlines livery in 2006. The 7E7's early customers are likely to be found in the Middle East and Asia.

Japan Airlines and Emirates are among the major carriers taking a hard look at Boeing's new model. Japan Airlines has large 767 domestic and regional fleets that it will have to upgrade over the next decade, and Emirates is phasing out its Airbus A300/A310 fleet while seeking a mid-range jet to reach Europe.

Airbus pulled ahead of Boeing in passenger aircraft deliveries for the first time in 2003 while the US giant suffered a drought of new orders and had to ditch two earlier commercial jet programs because of a lack of customer interest. One of those was the Sonic Cruiser concept, an airliner with a speed of Mach 0.98, almost the speed of sound, that was shelved in favor of the 7E7.

The Sonic Cruiser would sacrifice operating efficiency for speed, but airlines were simply not interested. The 7E7, with its conventional better-safe-than-sorry design, is a central element in the new post-scandal strategy headed by Boeing's new chief, Harry Stonecipher, a blunt veteran of the industry plucked from retirement. Aviation Week & Space Technology said he had "a track record of being decisive and scrupulous regarding accountability."

His predecessor, Phil Condit, was axed because of the allegations of corporate skullduggery that put Boeing through the wringer. But getting back into the Pentagon's good books is the core of Stonecipher's strategy. With the global airline market still struggling to get over 9/11, the military remains Boeing's biggest customer.

Stonecipher, 67, who retired as Boeing's vice chairman in 2002 and is the former president and CEO of McDonnell Douglas, has to convince the Department of Defense that Boeing is a reliable and honest supplier.