April 2009 Archives

BSI: Seattle

Imagine stepping onto a jetliner and knowing instantly that you’re on a Boeing airplane. I suppose a big flashing neon “BOEING” sign would accomplish that. But we prefer a more appealing sensory approach where you actually see and “feel” the difference.

You’ve noticed this in the interior images of the distinctive 787 Dreamliner and the 747-8 Intercontinental. Now, passengers of the Next-Generation 737 will enjoy a similar experience – one that we hope, like the 787, will give you more of a connection to flying.

It’s something we officially launched today, called the 737 Boeing Sky Interior (and yes, I had a little fun with the acronym for that in our title). The name is derived from the signature blue-sky lighting you’ll see as soon as you board the airplane.

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When you board a Next-Generation 737 with the new 737 Boeing Sky Interior, you’ll be welcomed by a soft blue “sky” created with LEDs.

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New window reveals. Why is that significant? Because the window “reveals” will direct your eye to the view outside – and that is where passengers in our research told us they most experience the excitement of flying.

We took good advantage of the extensive research Boeing conducted in the development of the Dreamliner - looking into what passengers really want. So, the new 737 Boeing Sky Interior will also feature a number of similar design improvements, beginning with a welcoming entryway into the airplane – with new cove lighting and curving architecture.

Check out a short video we produced inside the new interior mockup.

Passengers will not only sense the soft blue LED lighting overhead – they’ll perceive the openness in the form of a simulated “sky” in the entry, which will welcome you as you board.

We’ll also be incorporating larger overhead bins that pivot open (providing more space for luggage above, and less need to stow bags at your feet, meaning more room to stretch your legs below). The new shape of the bins will also add to the sense of space in the airplane.

On a more intangible level, having room for your bags right above you and not several rows up or down the cabin takes away some of the anxiety many people feel when flying.

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Bigger bins mean more room to stow your bags. More storage above creates legroom below.

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You can see and “feel” the difference. Soft blue cove lighting, curving architecture and larger window “reveals” offer a sense of space and comfort.

New sculpted sidewalls are also part of the new look in the cabin, adding some additional interior width. Together with the other architectural features such as the pivot bins and the LED lighting, the cabin will appear significantly larger and wider.

Also, while the actual size of the structural window remains the same, by redesigning the inner window “reveal” and window shade, we’ve added a bit to the maximum viewable area – amounting to about 10% greater viewing than the A320.

Other features:

  • Improved ventilation and cabin noise reduction
  • Intuitive passenger service units with an improved call button layout, lighting and speakers
  • New, touch screen flight attendant panels and controls
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A close up image of the new passenger service unit.

In conjunction with the new interior are several Next-Generation 737 performance enhancements – a 2% reduction in fuel consumption by 2011 due to structural improvements to reduce drag and fuel use, and improvements by our engine partner CFM.

As I’ve mentioned many times before, we’re absolutely committed to continuously improving our products, and the 737 Boeing Sky Interior and performance enhancements are just a demonstration of that commitment.

Airlines have reacted very positively to the new interior. Seven airlines from around the globe are launching the new product today. We think introducing this new interior philosophy is a real breakthrough in narrow body interiors, offering many of the passenger-preferred features previously only available on today’s twin-aisles.

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Many people familiar with the current 737 interior told us they can’t believe we haven’t increased the diameter of the airplane!

The first deliveries of airplanes with the 737 Boeing Sky Interior are scheduled for late 2010 and early 2011. When our launch customers fly these new airplanes, their passengers on the Next-Generation 737 will enjoy many of the same passenger-pleasing experiences as passengers on the Dreamliner.

Just don’t expect a flashing neon sign when you walk onto the airplane! My apologies, the improvements didn’t call for that. But I’m pretty sure that even without the neon, everything around you will signal that you’re in for a great flying experience.

Poseidon takes flight

The P-8A Poseidon, a military derivative of the Next-Generation 737-800, completed a three-and-a-half hour first flight over the weekend. I wanted to share a couple of the shots of this great looking airplane in the air.

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The P-8A Poseidon takes off from Renton Field Saturday on its first flight.

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The P-8A will serve in the U.S. Navy fleet as an anti-submarine warfare aircraft. It enters formal flight testing later this year.

Intercontinental at 25%

25% design release announced today for the 747-8 Intercontinental. This means a quarter of the information needed to build parts and tools for assembly has been completed.

Read the full story here:

747-8 Intercontinental Passes 25 Percent Design Milestone

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The 747-8 Intercontinental.

1Q 2009 results

We’ve just been through another tough quarter, not only for Boeing but for our industry. So, understandably our results are somewhat parallel to what’s happening in the global economy and its deep effects on the commercial airplane market.

Boeing’s first-quarter earnings dropped 50%, to $610 million. This is a reflection of the financial effect of our recent announcement that we’ll reduce 777 production rates in the middle of next year and delay planned modest increases in 767 and 747-8 production. However, company revenues increased 3%. This is partly a result of the 5% increase in commercial airplane deliveries compared to the same period in 2008.

While our business outlook may be clouded by global economic woes, generally speaking our production programs are executing well, our development programs are making progress, and our commercial services business are generating strong earnings.

During our earnings call, Boeing Chairman and Chief Executive Jim McNerney updated everybody about recent progress on the 787 Dreamliner program:

  • First flight remains targeted for later this quarter
  • Systems, including the engines, are cleared for first flight
  • Structural testing on the static airframe is complete

Earlier this week, we completed the full simulation of first flight using the actual airplane. Airplane #1 will shortly move out of the factory to the flight line. There, it will be fueled and its engines operated prior to a final systems check and high-speed taxi tests. We’re also making progress on airplane #2, on which we’ll conduct ground vibration tests before first flight.

So, clearly the Dreamliner program is moving in the right direction. Our 787 backlog remains strong - 886 orders from 57 customers around the world - and we’re confident in the long-term value of the 787 for our customers.

On our other major development program, the 747-8, we’re making progress toward delivering the first freighter (3rd quarter, 2010). Assembly work on the first 747-8 Freighter is approximately one-third complete.

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Progress continues on the 747-8 Freighter, as these images depict better than words. We’ve completed major assembly of the first set of wings.

As for the 747-8 Intercontinental, engineering is proceeding as planned. However, we announced today an adjustment in the schedule for the Intercontinental. The first passenger model is now expected to deliver during the 4th quarter of 2011 rather than the 2nd quarter of 2011 because of the softening freighter market and our resulting decision to delay a planned the increase in 747 production.

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The new 135-foot 3-inch (41.2 m) wings for the 747-8 incorporate the latest aerodynamic technologies to fly farther and more efficiently with an advanced airfoil for improved performance and fuel capacity.

On the general state of the industry and our company, let me summarize what we heard during our earnings call. Boeing remains a solid company with strong core businesses. But we face a difficult market environment - like all companies - in a global economy that’s more challenging than many of us have ever seen.

The economic and market pressures on our customers are clear, and these in turn impact our business. We’re continuing to step up our competitive and productivity efforts to manage costs, and as we’ve discussed here before, this unfortunately means layoffs throughout Boeing.

Our overall commercial backlog remains strong, and we continue to work with our customers to help them deal with the economic uncertainties and to deliver the airplanes they’ve purchased, on a schedule that meets their needs.

As we heard today, these are unprecedented times. But we’re managing our costs and investments, and we have a strong backlog and strong products and services. Boeing has a solid foundation from which to work through this.

Heard it through the grapevine

As we get closer to the first flight of the 787 Dreamliner, clearly there’s going to be more and more focus on day-to-day, if not minute-to-minute progress. It’s the first new airplane program where we’ve seen the full effects of “new media” or “social media” coverage.

Forums and sites are proliferating - ranging from fan and hobbyist pages to journalist blogs and everything in between – chronicling even the most obscure details gleaned from “sources.”

Web sites and blogs focused on commercial aviation are nothing new. We’ve been discussing commercial aviation through this blog for more than four years now. There are many experienced industry writers, journalists, and analysts who provide pertinent commentary through Web sites and other media. They add to the discourse and make the industry all the more interesting and exciting.

The challenge is distinguishing those sources and pages from the various blogs, Twitters and other sites which sometimes position themselves as authoritative – but really are not.

Even the most informed outsiders frequently lack comprehensive and direct knowledge of what’s happening at Boeing - including about our development programs, the 787 and 747-8.

Unfortunately, the seemingly insatiable appetite for any information about those programs has given rise to Web postings and social media sites that distribute rumors or details without ample – or sometimes any – of the context that would aid understanding of what’s really going on. Some of these sites use official sounding titles and designs in an attempt to enhance their credibility.

We’ve seen many examples of “exclusive” postings claiming to have just heard certain information from “sources.” These reports often claim to have inside information about our production plans or progress, orders, deliveries, cancellations, or development program milestones - that often turn out to be incorrect.

Airplane development programs are inherently complicated. What may seem like a major issue today is often fully resolved by tomorrow. Without the context that often can come only from a comprehensive program or company view, incorrect or incomplete information can be circulated as conclusion and fact when it is not. That helps nobody.

That’s why Boeing strives to communicate to the public when we’ve analyzed our data and reached truly informed conclusions, so we can provide definitive explanations of what’s happening. By the way, we’re also governed by securities laws and regulations that dictate how we disclose significant events.

So a bit of a “buyer beware” is in order. Shop carefully when it comes to the information you consume on the Web. Especially when that information has not come from a truly authoritative source.

Flight to the future

I had the opportunity to be in Chicago earlier in the week. And I didn’t have to go any farther than the airport to take part in a significant event not only for Boeing but for our long-time partner, American Airlines.

The occasion was the O’Hare Airport “welcoming,” if you will, of the newest Next-Generation 737-800s to American’s fleet.

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A soggy day in Chicago. As I joked at the event, I brought some Seattle weather with me so the airplane would feel at home.

The airline’s news release I think, really says it all in the headline: Despite Challenges, American Continues to Invest for the Long-Term With Fuel- Efficient Aircraft. Right there you get the whole story. An investment for the long-term.

For me, it was exciting to celebrate this with American, at a time when, let’s face it, not all the news is good news every day.

These are the first new 737-800s for American in about 8 years. The first of 76 of these airplanes American plans to add to their fleet over the next several years - part of American’s plan to replace their fleet of approximately 270 MD-80s.

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Inspecting the new “big bins” on board American’s new 737-800 in Chicago.

I was struck by the message delivered by American’s executives both in Chicago, and at another event held the same day in Tulsa at their maintenance base.

The message is that even with the significant challenges facing the industry right now, American is focusing on the long-term future, in the form of these Next-Generation airplanes.

As I told one reporter at the event, 76 airplanes is a big deal by any measure.

And it’s a big deal to take delivery of new airplanes in the current business environment. But it’s also clear that as American itself has said, not doing so could be more costly over the long-haul.

American, like other carriers, is having to cut back and find new ways to reduce costs while raising revenues. But replacing older, less efficient airplanes is also good business strategy. I think that U.S. carriers have done an especially good job at managing their business in recent months, and in many cases, proceeding with airplane replacement.

I particularly appreciate how American is characterizing these Next-Generation airplanes as a “vital investment.” An investment that will benefit the airline’s “customers, employees, shareholders, and the communities they serve,” keeping their product “competitive while offering cost, environmental and operational benefits.” I don’t think I could have said that better myself.

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Doing a media interview on the airplane with Ann Keeton of Dow Jones.

The two new airplanes will be based out of Chicago – a hub where American employs some 10,000 people. In my remarks there, I stressed that the Next-Generation 737 is the industry leader in schedule reliability. That’s a valuable attribute, since getting where you want to go on-time is a key concern for travelers out of O’Hare and anywhere else.

I also touched on another focus area in Chicago and elsewhere - this airplane is environmentally progressive – cleaner and more efficient – with reductions in carbon emissions and fuel use, as well as being quieter than the newest aircraft noise standards.

At the event in Tulsa, where I’m told the mayor, the Oklahoma Lt. Governor, and other dignitaries turned out, this is also a big deal. American’s Tulsa maintenance base employs several thousand people, and it’s where American maintains and services their 737 fleet.

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In the hangar as Tulsa celebrates a shiny new addition to the fleet. (Photo courtesy of American Airlines)

My Boeing colleague, Ray Marzullo, our vice president of customer support for the Americas for Commercial Aviation Services, paid tribute to the long-time service of American’s fleet of MD-80s and told the crowd that Boeing stands “ready to work with you and make this transition from Super 80s to 737-800s a smooth process and a tremendous success.”

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Employees in Tulsa got a first-hand look at the new interior. (Photo courtesy of American Airlines)

At both events, employees and other folks in attendance got a chance to tour the inside of their new airplanes, and clearly American was very excited to show off the features of these Next-Generation 737s and to have their passengers experience it all for themselves beginning this week.

For a closer look, the Sky Talk blog has a pretty good review of the airplanes and some cool photos and discussion of the new passenger and interior features such as increased overhead storage space, and new flip-down LCD monitors for in-flight entertainment.

Production decisions

We announced adjustments today that will affect production plans on some of our programs. You can read the release here:

Boeing to Adjust 2010 Twin-Aisle Airplane Production Plan

Middle East journey

In my job, I’m fortunate to be able to visit far-flung regions and to meet with people from all over the world.

But I’d hardly say I’ve been everywhere, and recently I had the chance to visit two key cities I’d never been to before - Cairo and Beirut.

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I did manage a little sightseeing while in Cairo.

What always intrigues me as I travel is the quality and variety of questions I’m asked by journalists in various countries. My visits to Egypt and Lebanon were no exceptions.

Clearly, the journalists in these important markets are aware of the great potential for growth there.

As you’d expect, I did get asked my view on the aviation outlook.

Boeing has a long history in the region, and we expect to continue our partnership with Middle East carriers for many years to come. Of course, no particular region is immune to the impact of the current world economic slowdown.

But as I noted, the Middle East has enjoyed unprecedented double-digit air traffic growth over the past 5 years, and we expect that growth to continue at an average 5.5% rate annually over the next 20 years.

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Briefing reporters in Beirut.

The growth rate in the Middle East represents a market of about 1,580 airplanes valued at $260 billion. Clearly this is why you’ve seen Boeing (and Airbus) focus a lot of energy in this region, and it underscores why Boeing has developed and implemented a long-term strategy to be the preferred airplane manufacturer.

Based on recent sales and dollar value, Boeing splits the commercial airplanes market nearly evenly with our competitor - mostly due to the success of the 777 as the preferred widebody airplane in the Middle East. That’s a trend we expect to see continue with the introduction of the 787 Dreamliner – an airplane we think is the perfect complement to our customers’ 777 fleets.

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Along the Beirut waterfront.

As I mentioned, this was my first visit to Cairo and to Beirut - two wonderful cities with a rich history and a promising future. It was a pleasure to experience some heartfelt hospitality and an eagerness on the part of people in these cities to share their culture and heritage with a visitor such as myself, and – on the advice of nearly everyone I spoke to both in Cairo and Beirut – I made sure to sample some amazing Lebanese cuisine.

The fattet we had at the Abdel Wahab Restaurant in Beirut was delicious. It’s made there with grilled eggplant in rich garlic yogurt sauce.

I truly enjoyed the dish, and it made me think of an old New York saying that goes something along the lines of “a nickel will get you on the subway, but garlic will get you a seat.”

Facing realities

I had the opportunity recently to spend a couple of days at the Boeing Leadership Center in St. Louis last month, taking part as an instructor in a training program for Boeing executives called BEP - Boeing Executive Program.

The experience gives us a chance to share our knowledge and our professional and life experiences, if you will, with our colleagues. We call it “Leaders Teaching Leaders” or LTL. The beauty of it is that I think the teachers get as much out of the experience as the “students.” I know that I enjoyed the give and take.

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Thousands of current and future leaders from across The Boeing Company travel to the Boeing Leadership Center each year. During each program, employees share ideas that enhance the relationships between business units and help shape the future of Boeing.

During BEP, Boeing senior executives do the teaching, covering topics such as diversity, ethics, values, and what we expect from our leaders. Over a week or so of discussions and activities, attendees engage with members of the Boeing leadership team, conducting business simulations that give them a practical connection to their work environment, developing and balancing the ideas of teamwork, collaboration and competition.

The idea is that the executives leave St. Louis with a global mindset, which is vital in an increasingly competitive marketplace.

My teaching mate for the course was from Boeing’s Integrated Defense Systems: Jim Simpson, Vice President - Business Development for Space and Intelligence Systems.

Jim and I led a discussion around what we termed “facing external realities.” We wanted to share some insights and experiences from our own worlds here at Boeing, and give a view of today’s business strategies, the competition we face, and our outlook and opportunities in the future.

To help set the stage, we had a little fun, and during the class we challenged the “students” with a Jeopardy-style game. Let me share a few of the Jeopardy “clues” with you. See how well you do.

  1. THIS SAW AN UNPRECEDENTED DROP IN VOLUME AND REVENUE IN THE LAST QUARTER OF 2008.

  2. BRAZIL, CHINA, FRANCE, GERMANY, JAPAN, AND RUSSIA.

  3. A $5.00 REDUCTION IN THIS BENEFITS THE WORLD’S AIRLINES BY APPROXIMATELY $12 BILLION.

  4. ONE OF THE BIGGEST CHALLENGES / OPPORTUNITIES FACING THE LONG-TERM SUCCESS OF OUR INDUSTRY.

  5. ADJUSTING CAPACITY, IMPROVING EFFICIENCY, AND RESTRUCTURING.

The correct “questions” are at the end of this post.

How we deal with our struggling world economy is a big part of the reality today, along with volatile fuel prices, strong environmental pressures, and the threat of future competitors in commercial airplane manufacturing.

At Boeing Commercial Airplanes, clearly we’re facing a situation where airplane orders are expected to decline in 2009. It remains a volatile business environment, and while there is continued demand for replacement aircraft, some customers will need to defer or even cancel orders.

Boeing’s challenge is to keep our production and delivery “skyline” filled. On the business side, our efforts to reduce costs and run our company more efficiently become even more critical as we work to keep our balance sheet strong.

To some extent we can anticipate and mitigate the impacts of today’s realities through sound business strategy – and in certain cases these challenges may be future opportunities. What we do with our resources during this downturn is the key to emerging from it.

So you can see that this is a great conversation to have, especially today. It sets the stage - really starts the thought process - for executives to consider the world beyond their everyday activities. We want our leaders to think globally, and consider greater possibilities, and I think this program helps engage Boeing executives with the issues facing our industry and our company as a whole.

Now, here are the correct quiz “questions”:

  1. WHAT IS WORLD AIR CARGO?

  2. WHAT ARE THE COUNTRIES IN WHICH THERE ARE COMMERCIAL AIRPLANE MANUFACTURERS IN COMPETITION WITH BOEING?

  3. WHAT IS THE PRICE OF A BARREL OF OIL?

  4. WHAT IS THE ENVIRONMENT / CLIMATE CHANGE?

  5. HOW ARE AIRLINES ADAPTING TO THE REALITIES OF THE MARKET?

How did you do? Ready to move on to the next round?

 

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