| The Boeing Company (NYSE: BA, TYO: 7661 ) is | | | | |
| an aerospace and defense corporation | | | | In March 2005 the Boeing board forced |
| headquartered in Chicago, Illinois. Boeing is | | | | President and CEO Harry Stonecipher to |
| the largest global aircraft manufacturer by | | | | resign. Boeing said an internal investigation |
| revenue[1] and the second-largest defense | | | | revealed a “consensual†|
| contractor in the world.[2] In 2005, the | | | | relationship between Stonecipher and a female |
| company was the world’s largest civil | | | | executive that was “inconsistent with |
| aircraft manufacturer in terms of value (with | | | | Boeing's Code of Conduct†and |
| 49% of orders and 45% of deliveries), | | | | “would impair his ability to lead the |
| overtaking Airbus for the first time since | | | | companyâ€.[4] James A. Bell served as |
| 2000. The largest exporter in the United | | | | interim CEO (in addition to his normal duties |
| States, Boeing’s stock is a component | | | | as Boeing’s CFO) until the appointment |
| of the Dow Jones Industrial Average. | | | | of Jim McNerney as the new Chairman, |
| | | | President, and CEO on June 30, 2005. |
| In recent years Boeing has faced an | | | | |
| increasingly competitive Airbus, which offers | | | | Industrial espionage |
| some commonality between models (reducing | | | | |
| maintenance and training costs) and the | | | | In June 2003 Lockheed Martin sued Boeing |
| latest fly-by-wire technology. From the 1970s | | | | alleging the company had resorted to |
| Airbus has increased its family of aircraft | | | | industrial espionage in 1998 to win the |
| to the point where they can now offer an | | | | Evolved Expendable Launch Vehicle (EELV) |
| aircraft in almost every class Boeing does. | | | | competition. Lockheed alleged that former |
| Indeed, Airbus is now competing in markets | | | | employee Kenneth Branch, who went to work for |
| that Boeing once had a monopoly over, e.g. | | | | McDonnell Douglas and Boeing, passed 25,000 |
| the A320 has been selected by several | | | | proprietary documents to his new employers. |
| low-cost operators (the aircraft used by | | | | Lockheed argued that these documents allowed |
| these airlines has traditionally been the | | | | Boeing to win 21 of the 28 tendered military |
| 737) and the very large aircraft market, the | | | | satellite launches. |
| A380. The 747 has suffered by competing with | | | | |
| Boeing’s 777-300 series. | | | | In July 2003 Boeing was penalized, with the |
| | | | Pentagon stripping $1 billion worth of |
| Currently, Boeing is planning to introduce a | | | | contracts away from the company and awarding |
| new aircraft; the 787 | | | | them to Lockheed. Furthermore, the company |
| “Dreamlinerâ€, and four new | | | | was forbidden to bid for rocket contracts for |
| aircraft variants; the ultra-long-range | | | | a twenty-month period which expired in March |
| 777-200LR, the 737-900ER, 737-700ER and the | | | | 2005. |
| 747-8. The 787 was originally known by the | | | | |
| developmental designator 7E7. The Boeing | | | | In early September 2005 it was reported that |
| 777-200LR has the longest range of any | | | | Boeing was negotiating a settlement with the |
| commercial aircraft, and is the first | | | | U.S. Department of Justice in which it would |
| airliner to able to fly halfway across the | | | | pay up to $500 million to cover this and the |
| planet with a commercially viable payload, | | | | Darleen Druyun scandal.[5] |
| and holds the world record for the longest | | | | |
| flight by a commercial airliner at 21,601km. | | | | Airbus subsidy dispute |
| The 777-200LR has completed flight-testing | | | | |
| and certification, with the first aircraft | | | | In October 2004, Boeing filed a complaint at |
| delivered to Pakistan International Airlines | | | | the World Trade Organization, claiming that |
| (PIA) in 2006. The 737-900ER, previously | | | | Airbus had violated a 1992 bilateral accord |
| designated as the 737-900X is an improvement | | | | when it received what Boeing deems as |
| to the 737-900. The current 737-900 model has | | | | “unfair†subsidies from several |
| limited range, and is limited in capacity | | | | European governments. Airbus retaliated by |
| such that it can not be flown in a | | | | filing another complaint, contesting that |
| high-density configuration, rather requiring | | | | Boeing had also violated the accord when it |
| a solidly two-class configuration. The | | | | received tax breaks from the U.S. Government. |
| 737-900ER will extend the range of the | | | | Moreover, the E.U. also complained that the |
| 737-900ER to a similar range as the | | | | investment subsidies from Japanese airlines |
| successful 737-800 with the capability to fly | | | | violated the accord. |
| more passengers, due to the addition of two | | | | |
| extra emergency exits. | | | | On January 11, 2005 the two parties (Boeing |
| | | | and Airbus) agreed that they would attempt to |
| In 2004, Boeing cancelled production of the | | | | find a solution to the dispute outside of the |
| 757 after 1055 were produced, with the last | | | | WTO. |
| aircraft going to Shanghai Airlines, in | | | | |
| China. More advanced, stretched versions of | | | | However, in June 2005, Boeing and the United |
| the 737 were beginning to compete against the | | | | States government reopened the trade dispute |
| 757, and the new 787-3 will fill some of the | | | | with the WTO, claiming that Airbus had |
| top end of the 757 market. Boeing also soon | | | | received illegal subsidies from European |
| canceled the production of 717 due to slow | | | | governments. Airbus has also retaliated |
| sales, and the 767 is likely to cease | | | | against Boeing, reopening the dispute and |
| production soon. However, if Boeing manages | | | | also accusing Boeing of receiving subsidies |
| to win the contract for new USAF tankers, the | | | | from the US government. |
| 767 program might be saved. Boeing also is | | | | |
| building an advanced version of the 747, the | | | | Product developments |
| 747-8, which will compete more closely with | | | | |
| the Airbus A380. The aircraft was informally | | | | Finally, Boeing achieved several consecutive |
| announced at the 2005 Paris Airshow. The | | | | successes, beginning with the formal launch |
| 747-8 is stretched and will offer higher | | | | of the 787 for delivery to All Nippon Airways |
| efficiency and longer range. The passenger | | | | and Air New Zealand. Currently, the 787 |
| and cargo versions will be 12ft and 18ft | | | | orderbook stands at over 404 airplanes. |
| longer than current 747-400 versions. | | | | |
| | | | Boeing also received the launch contract from |
| On August 21 2006 Sky News alleged that | | | | the US Navy for the Multimission Maritime |
| Boeing's Next Generation 737s built from 1994 | | | | Aircraft, an anti-submarine warfare patrol |
| to 2002 contained defective parts. The report | | | | aircraft. Several orders for the Wedgetail |
| stated that various parts of the airframe | | | | AEW&C airplanes are expected as well. |
| produced by Ducommun were found to be | | | | |
| defective by Boeing employees but that Boeing | | | | In November 2004, Boeing announced it will |
| refused to take action. Boeing said that the | | | | offer a cargo version of the popular 777 |
| allegations were "without merit". | | | | model, based on the 777-200LR. Boeing |
| | | | launched the Boeing 777 Freighter in May 2005 |
| Boeing continues to serve as the prime | | | | with an order from Air France. Other |
| contractor on the International Space Station | | | | customers rumored to be interested include |
| and has built several of the major | | | | Lufthansa, EVA Airways, ILFC, GECAS, Air |
| components. | | | | Canada and Emirates. |
| | | | |
| Recent history | | | | Boeing has achieved above projected orders |
| | | | for its 787 Dreamliner, outselling the rival |
| After several decades of numerous successes, | | | | Airbus A350. A large blow to Airbus came as |
| Boeing lost ground to Europe’s Airbus | | | | Emirates Airlines president Tim Clark stated |
| and subsequently lost its position as market | | | | that his airline must be convinced that the |
| leader in 2003. Multiple Boeing projects were | | | | 250 to 290-seat A350 would not repeat the |
| pursued and then cancelled. The Boeing Sonic | | | | “misses†by Airbus in performance |
| Cruiser is among these projects. The Boeing | | | | and delivery. Emirates has held off ordering |
| Sonic Cruiser was launched in 2001 along with | | | | either airplane as it tries to convince |
| a new advertising campaign to promote its new | | | | Boeing to build a larger version of the 787, |
| motto, “Forever New Frontiersâ€, | | | | the 787-10 - which is the airline’s |
| and rehabilitate its image. Boeing is now | | | | preferred option. Air Canada also dealt |
| focused on the newly-launched 787 as a | | | | Airbus a blow by replacing its entire A330 |
| platform of total fleet rejuvenation, which | | | | and A340 fleet with 96 Boeing 777s and 787s. |
| has benefited from strong sales success at | | | | |
| the expense of Airbus' competing offerings. | | | | Boeing officially announced in November 2005 |
| | | | that it would produce a larger version of the |
| On October 10, 2001, against fierce | | | | 747, the 747-8, in two models, commencing |
| competition for the contract to the JSF, | | | | with a model for two cargo carriers with firm |
| Boeing lost to rival Lockheed Martin in the | | | | orders for the aircraft. The second model, |
| multi-billion dollar contract. | | | | slightly shorter than the cargo version but |
| Boeing’s plane was the X-32, which | | | | still longer than the 747-400, dubbed the |
| lost out to Lockheed’s F-35 entrant. | | | | Intercontinental, would be produced for |
| The X-32 may have been hampered by the | | | | passenger airlines that Boeing expected would |
| requirement for a redesign after several | | | | place orders in the near future. Both models |
| flaws were found in the original concept. | | | | of the 747-8 would feature a lengthened |
| | | | fuselage, new, advanced engines and wings, |
| In Early May 2004 Boeing announced that the | | | | and the incorporation of other technologies |
| 717, the last civil aircraft to be designed | | | | developed for the 787. |
| by McDonnell-Douglas, would cease production | | | | |
| by 2006, leaving the C-17 military transport | | | | Boeing’s most successful new aircraft |
| as the last McDonnell-Douglas airplane design | | | | measured by recent orders remained the 737, |
| still in production. | | | | for which it received orders totaling 387 new |
| | | | units in 2005 as reported on August 7. The |
| On August 2, 2005 Boeing sold its Rocketdyne | | | | 737-900ER is the latest version of the |
| rocket engine division to Pratt & Whitney. | | | | venerable plane offered by Boeing and is the |
| | | | largest model of the 737 line at a length of |
| In May 2005, Boeing announced its intent to | | | | 138 feet. |
| form a new company, United Launch Alliance | | | | |
| with its competitor Lockheed Martin. The new | | | | The 777-200LR Worldliner embarked on a |
| company will be the sole provider of rocket | | | | well-received global demonstration tour in |
| launch services to the US government. The | | | | the second half of 2005, showing off its |
| joint venture is expected to gain regulatory | | | | capacity to fly farther than any other |
| approval and be complete near the end of | | | | commercial aircraft. On November 10, 2005, |
| 2005. | | | | the 777-200LR set a world record for the |
| | | | longest non-stop flight. The plane, which |
| On May 1, 2006 Boeing announced that it had | | | | departed from Hong Kong traveling to London, |
| reached a definitive merger agreement to | | | | took a longer route, which included flying |
| purchase Dallas, Tx based Aviall, Inc. for | | | | over the U.S. It flew 11,664 nautical miles |
| $1.7 Billion and retain $350 Million in debt. | | | | (21,601km) during its 22-hour 42-minute |
| Aviall, Inc. and its subsidiares, Aviall | | | | flight. |
| Services, Inc. and ILS will become a wholly | | | | |
| owned subsidiary of Boeing Commercial | | | | Realizing that increasing numbers of |
| Aviation Services (BCAS). Aviall's CEO, Paul | | | | passengers have become reliant on their |
| E. Fulchino will report to BCAS' General | | | | computers to stay in touch, Boeing introduced |
| Manager/Vice President, Lou Mancini. The | | | | Connexion by Boeing, a satellite based |
| merger agreeement was approved by Aviall's | | | | Internet connectivity service that promised |
| shareholders on September 19 and final | | | | air travelers unprecedented access to the |
| closing commenced on September 20, 2006 | | | | World Wide Web. The company debuted the |
| | | | product to journalists in 2005, receiving |
| Unethical conduct | | | | generally favorable reviews. However, facing |
| | | | competition from cheaper options, such as |
| In May 2003 the US Air Force announced it | | | | cellular networks, it proved too difficult to |
| would lease 100 KC-767 tankers to replace the | | | | sell to most airlines. In August 2006, after |
| oldest 136 of its KC-135s. The 10 year lease | | | | a short and unsuccessful search for a buyer |
| would give the USAF the option to purchase | | | | for the business, Boeing chose to discontinue |
| the aircraft at the end of the contract. In | | | | the service. |
| September 2003, responding to critics who | | | | |
| argued that the lease was vastly more | | | | Future Concepts |
| expensive than an outright purchase, the DOD | | | | |
| announced a revised lease of 74 aircraft and | | | | In May 2006, four concept designs being |
| purchase of 26. | | | | examined by Boeing were outlined in the |
| | | | Seattle Times. Codenamed after the well-known |
| In December 2003 the Pentagon announced the | | | | Muppets (the design team is known as the |
| project was to be frozen while allegations of | | | | Green Team), the designs concentrated |
| corruption by one if its former procurement | | | | primarily on reducing fuel usage. All four |
| staffers, Darleen Druyun (who had moved to | | | | designs illustrated rear-engine layouts. |
| Boeing in January) was investigated. The | | | | "Fozzie" employs open rotors and would offer |
| fallout of this resulted in the resignation | | | | a lower cruising speed. "Beaker" has very |
| of Boeing CEO Philip M. Condit and the | | | | thin, wide wings, with the ability to |
| termination of CFO Michael M. Sears. Harry | | | | partially fold-up to facilitate easier |
| Stonecipher, former McDonnell Douglas CEO and | | | | taxiing. "Kermit Kruiser" has forward swept |
| Boeing COO, replaced Condit. | | | | wings over which are positioned its engines, |
| | | | with the aim of lowering noise below due to |
| Druyun pleaded guilty to inflating the price | | | | the reflection of the exhaust signature |
| of the contract to favor her future employer | | | | upward. "Honeydew" with its delta wing |
| and to passing information on the competing | | | | design, resembles a marriage of the flying |
| Airbus A330 MRTT bid (from EADS). In October | | | | wing concept and the traditional tube |
| 2004 she was sentenced to nine months in jail | | | | fuselage. As with most concepts, these |
| for corruption, fined $5,000, given three | | | | designs are only in the exploratory stage |
| years of supervised release and 150 hours of | | | | intended to help Boeing evaluate the |
| community service. | | | | potentials of such radical technologies. |