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Boeing hints at more sales as Dreamliner comes true

By David Bowermaster and Dominic Gates
Seattle Times aerospace reporters

	GETTY IMAGES This computer illustration provided by Boeing shows the company's next-generation jet, the 7E7 Dreamliner. Japan's All Nippon Airways wants 50 of the jets, representing the largest single commercial launch order in Boeing's history.
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As Nicole Piasecki launched into her prepared remarks at the 24th AirFinance conference here, the senior vice president of Boeing's marketing and strategy was clearly tickled about her timing.

"It is a pleasure to be here," she told the overflow crowd of dark-suited financiers at New York's Plaza Hotel, "on the day Boeing and All Nippon Airways are formally launching the 7E7."

All Nippon had announced earlier in the day its order for 50 wide-body 7E7s with a list price of $6 billion. The deal received endorsements from virtually all corners of the aviation and financial worlds.

All Nippon's is the largest single launch order ever for a new Boeing jet and will stabilize hundreds of production jobs and thousands of engineering jobs in the Puget Sound region, home to the 7E7 design team and to the jet's final-assembly production line in Everett.

	Nicole Piasecki

Back in the region, Boeing 7E7 program manager Mike Bair held a media conference call to review the deal. While he offered few new details, he indicated that this big launch order could presage an early level of sales interest beyond Boeing's ability to produce the plane quickly enough.

"We have a limited number of airplanes that we are going to be able to provide in the first couple of years," Bair said.

While many early sales may go to Asia, Bair said, Boeing expects sales to even out over the 20-year initial life of the program, with about one-third in Asia, one-third in the Americas, and one-third in Europe and the Middle East.

Bair said Boeing is talking closely with several U.S. airlines, including both major and discount carriers, about the 7E7.

"A lot of (low-cost carriers) are thinking maybe this airplane might be an opportunity to take their business model beyond the domestic and regional service you see today," he said.

	Mike Bair

That hint was echoed at the AirFinance conference by Sam Pearlstein, an aerospace analyst for Jeffries & Co.

"We believe that the 7E7 has been offered to at least one U.S. low-cost carrier that is considering beginning international flights," Pearlstein said. He did not speculate on which airline.

Pearlstein told clients he expects additional orders soon from oft-rumored customers Singapore Airlines, Emirates, Kuwait Airways and Japan Airlines.

"This is a solid start for the 7E7 program, and additional orders this year could strongly validate the attractiveness of the aircraft and signal backlog growth for Boeing Commercial Airplanes in 2004," Byron Callan, a Merrill Lynch aerospace analyst, wrote in a research report.

Scott Scherer, vice president of the aircraft financial-services unit of Boeing Capital, said financiers have been supportive of Boeing's business plan for the 7E7.

"There's been tremendous enthusiasm," Scherer said. "Now that we have the launch, it's very real and tangible. It's all the news (at the conference) today."

Investors reacted positively, boosting shares of Boeing, a Dow industrials stock, by 79 cents to $43.24 on a day the index fell.

The All Nippon order, while good news for the new 7E7 program, could have negative consequences for the ailing 767 jet program, also in Everett. With the U.S. Air Force deal for airborne-refueling tankers in limbo, the future of the 767 line is in doubt. Every commercial order on the books provides an additional six weeks of production.

Only 17 commercial 767 orders remain in Boeing's backlog; eight of those are for All Nippon. Will those 767s be needed now? Bair was circumspect.

"They have not given us any indication that they don't plan on taking those (767) airplanes," Bair said. "But obviously we are having discussions with them."

Boeing said yesterday its Everett employees will have a celebratory event to mark the 7E7 launch at 2 p.m. tomorrow.

Boeing, Machinists union in St. Louis talk contract
The Associated Press

ST. LOUIS — Health-care costs, outsourcing and job security were the big issues yesterday as contract talks began in earnest between Boeing and the Machinists union in St. Louis.

The International Association of Machinists and Aerospace Workers District 837 represents about 2,800 of Boeing's 15,000 workers in St. Louis, headquarters of the company's defense business. Earlier this month, union members gave 98 percent approval to a strike vote if contract talks snag after the current three-year deal expires May 23.

The workers make fighter jets, missiles, smart bombs and other weapons.

David Heath, Boeing's senior manager for union relations, expects a "best and final offer" from the company by May 18.

Each Machinists local handles its own negotiations. Dick Schneider, chief negotiator for the union, said the contract with District 837 is among 11 Boeing-Machinists contracts being negotiated this year.

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