Farnborough Air Show

Boeing retools as competitors multiply

 - July 20, 2010, 6:31 AM

Boeing Commercial Airplanes chief executive Jim Albaugh fully acknowledged here at Farnborough that the new 787 faces a possible seventh delay if first delivery slips into next year, which was hinted at in a statement from the company last week. Such a slip would be a small setback, but by no means an end to Albaugh’s effort to restructure the division in the face of continuing international competition.

The company’s position as the leading airliner manufacturer has been usurped in recent years by Airbus and, at the lower end of the product range, it is being challenged by aspiring manufacturers who want to enter the market for the below-100-seat sector.

Accordingly, the company has needed a shot in the arm–something achieved through his reorganization that could restore confidence and assure employees that, under his leadership, Boeing can regain market dominance.

This new strategy involves many tactics, including tighter management, long-term planning and sharper focus on prime functions. Outlining moves here yesterday, the Boeing Commercial Airplanes chief executive said he has strengthened oversight of enterprise engineering, established senior advisory groups (including the recall from retirement of former executive vice president sales Seddik Belyamani) and established program management functions.

The five test 787s (three of which will not be delivered) have accumulated some 1,200 flight hours in 370 flights. Albaugh confirmed that unexpected problems with replacement of flight-test instruments has reduced “schedule margin,” with deliveries perhaps moving “a matter of weeks” into early 2011 compared with the original mid-2008 target date. He attributed the problems to Boeing’s “probably” having outsourced too much 787 work. “We lost control and, in future, I believe we will outsource less,” he said.

Albaugh believes that 737 production could be increased beyond the planned 35 per month, with the company continuing to mull single-aisle market plans. As for continued product development, he said Boeing could produce an all-new single-aisle design, re-engine the current 737, or “do nothing.”

He said the manufacturer was talking to General Electric, Pratt & Whitney and Rolls-Royce about alternative powerplants, from which it would choose one before deciding “in all probability” before year-end whether to offer a re-engined variant. Leading 737 customer Southwest Airlines is “very involved” in discussions and “might not want to wait until 2022 [for a solution],” said Albaugh.

Boeing also is considering the “most effective” strategy to improve the 777, spending “a lot of time” talking to airlines to get the right solution, he said. In an exercise dubbed “777X,” Boeing is considering a new engine, a new [composites] wing and an all-new design, he said, adding that the matter is “very open right now.”