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Home / Business / Companies / Airlines

Boeing's rookie plane boss plots assault on Airbus with new jets

By Julie Johnsson
Bloomberg·
8 Jun, 2017 09:14 PM5 mins to read

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A monitor displays Boeing signage on the floor of the New York Stock Exchange. Photo / Getty Images

A monitor displays Boeing signage on the floor of the New York Stock Exchange. Photo / Getty Images

Boeing is about to go on the offensive after watching Airbus creep into a market segment the US planemaker had dominated since the 1980s.

Responsibility for the success or failure of the new initiatives falls to a relative newcomer: Kevin McAllister, a 27-year General Electric veteran.

On the job a little more than six months, he's the first outsider to run Boeing's US$65 billion commercial airplanes division. The multibillion-dollar bets he's guiding represent Boeing's response to the sales boom Airbus has enjoyed by inexpensively updating older jet programs.

One Boeing project is for an all-new aircraft family to cover the market between the biggest narrow-body planes and smallest wide-bodies.

Another is for a larger 737 Max, expected to launch later this month, to take on Airbus's hot-selling A321neo.

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Both members of the global jetliner duopoly also have to contend with development programs in Russia and China.

That takes McAllister back to the painting in his office depicting the heyday of the steel works in Bethlehem, Pennsylvania, his hometown. The memory of the now-shuttered mills helps provide perspective, he said, that success isn't guaranteed for the titans of US industry -- not even for Boeing, the country's largest exporter.

"It's a reminder that as a company we have to reinvent ourselves every day," McAllister, who now works out of a Seattle-area office park, said during his first meeting with reporters June 2.

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The first of the new planes likely to hit the market is the 737 Max 10, which would be the largest version of Boeing's workhorse single-aisle plane. The company is in discussions with about a dozen potential buyers of the Max 10, which is aimed at curbing the A321's appeal, said Ihssane Mounir, Boeing's chief airplane salesman.

Development costs for Boeing will probably be less than $1 billion for the plane, said Richard Aboulafia, an aerospace analyst at Teal Group. The aircraft will be five feet longer than the Max 9, and feature a taller, semi-levered landing gear borrowed largely from Boeing's 777 wide-body jetliner.

"It's a relatively minor development program for us to do," McAllister said. While the Boeing plane is comparable in terms of seating, it's expected to burn about 5 percent less fuel than the heavier Airbus rival.

As McAllister learns Boeing's culture and walks the floors of its factories, he and his team are also meeting weekly on a more ambitious project Boeing has long been studying: its first all-new jetliner family since the 787 Dreamliner a decade ago.

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It won't be cheap. Development could cost $10 billion to $15 billion based on past programs, Aboulafia said. And that's if the process goes smoothly. The Dreamliner's engineering changes, cost overruns and supplier stumbles saddled the company with nearly $30 billion in deferred production costs.

The goal of the new airplane concept -- dubbed the 797 by aircraft-leasing pioneer Steven Udvar-Hazy -- is to generate new travel markets. The twin-aisle, oval-shaped jets would link cities that can't be efficiently served by current aircraft models on medium-length flights, said Mike Delaney, a Boeing vice president and general manager for airplane development.

The planes would debut in the mid-2020s. They would seat between 220 and 270 passengers. They would fly 4,800 to 5,000 nautical miles, connecting Chinese cities to Southeast Asia, crossing the Atlantic or joining the US to destinations deeper into Latin America.

"We're going to do exactly in that market what we did with the 787," Delaney said.

"Put in an airplane that's able to fly about 30 per cent more city pairs."

While the strategy mirrors the more than 140 new routes pioneered by the Dreamliner, Boeing has studied and changed its engineering and development process after the first carbon-fibre jetliner fell years behind schedule.

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Boeing is using a processing capability, called the "digital twin," to design parts and configure the production system around the new aircraft's architecture, from automation to tooling.

Following a process that has been honed with the 737 Max and 777X should lessen engineering error and disruption in the factory, Delaney said.

The proposed jets would also replace the Boeing 757 and 767 aircraft that dominated the market spanning the largest narrow-bodies and smallest twin-aisle planes. Airbus has been chipping away at that by adding new engines to the A321 narrow-body and smallest twin-aisle A330neo model.

The European planemaker is looking at expanding the A321neo, chief salesman John Leahy told reporters this week.

"It's not just the threat itself," he said in reference to Boeing's new plane. "We listen to our customers."

Delaney insists Boeing's twin-aisle jet would be superior to an even longer Airbus single-aisle plane. "I certainly wouldn't want to be in row 65E, waiting to get off."

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Boeing is working with 57 potential customers as it hones designs, range and potential fuel savings, McAllister said. It's not sufficient to identify a market opportunity. The real challenge lies in developing a business case that will win the approval of Boeing Chief Executive Officer Dennis Muilenburg and company directors.

"We have to bring Dennis and the board a dog that hunts," he said.

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