Boeing and the Aviation Market

Ed. I like the airline and computer business and watch it. Here’s an interesting article on Boeing.

Townhall.com George Will January 18, 2007

CHICAGO — After an excellent year, Boeing is counting its blessings, which include its competitor. They also include an anticipated doubling of the commercial aviation market in the next 20 years, which will require 27,000 new planes costing $2.6 trillion.

Americans ambivalent about globalization should note how Boeing, under CEO James McNerney, is prospering. The 9/11 attacks devastated commercial airlines, causing Boeing — which cut its jetliner production in half — to rapidly shed more than 40,000 of its 93,000 workers who designed and built the planes. But the revival has added back some 13,000 new jobs and raised Boeing’s stock price from $25 to $88.

Even without terrorism, the commercial aircraft industry is not for the fainthearted. Companies must wager billions developing products that anticipate travelers’ preferences and airline strategies a decade later. Boeing reportedly wagered $8 billion in developing the midsize widebody (up to 290 passengers) 787 Dreamliner, the first of which will be delivered in 2008. Boeing’s bet is that the market favors point-to-point flights rather than a hub-and-spoke system with huge planes delivering passengers to a few large cities, from which they are dispersed to their destinations in smaller planes. With 471 orders and commitments for 787s, at up to $180 million apiece, the plane — made largely of a light (fuel-saving) carbon composite material — already is a huge success. Boeing’s competition no longer is.

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