There are multiple reasons why Boeing is contemplating launch the 7E7 project. In 2003, Commercial aeroplane market was not to its best due to multiple incidents making the airline industry profits worst seen in a long while; February 2003 – China announced breakout a contagious illness ‘SARS’, which subsequently spread to Canada and Australia resulting in global travel warnings. March 2003 – the United States of America along with coalition forces began the military invasion of Iraq. Further to these two major incidents, the threat of global terrorism after September the 11th was still very much active.
Boeing has two primary divisions (1) commercial airplanes and (2) Integrated defence system. Defence division despite of competition, seen its revenue’s rising such as $16.6 billion defence contract in 2002 despite of competition such as Lockheed Martin, Northrop Grumman and Raytheon. On the other hand commercial division’s financial situation slump gradually after Boeing’s 747X and Sonic Cruiser projects cancellation in late 1990s and in year 2002 strong competition with Airbus when Boeing losing large number of customers with Airbus doing very well with A330-200 orders. As a matter of fact, for the very first time in history, Airbus recorded 233 orders beating Boeing in terms of orders received, threatening productions of Boeing’s 757/767 if no orders were coming in.
This competition and continuous decline of orders made Boeing looked for opportunities to improve its low financial data. With Michael Bair leading the project, Boeing plans to launch all new super-efficient ‘dolphin-like’ design commercial aircraft ‘7E7’ or ‘Dreamliner’ to replace 757, 767 and A300. The 7E7 once produced would be the most efficient and first commercial aircraft built with carbon-reinforced material using more efficient engine, a new cabin interior, new glass cockpit and the latest in aviation technologies based on Boeing’s own very successful launch of 777 back in June 1995.
· 2 versions of 7E7, baseline and stretch, both more environment friendly and most efficient engines than its predecessors
· Carry 200–250 passengers on routes between 6,600 & 8,000 nautical miles (12,200–14,800 km)
· 20% less fuel for comparable missions than any other wide-body aeroplane
· Travel at speeds similar to today’s fastest wide bodies, Mach 0.85
· All new health-monitoring systems to allow 7E7 to self-monitor and report maintenance requirements for ground-based computer systems
· The baseline 7E7 will have 57% more cargo compared to the Airbus A300-600
· The possibility of Snap-on wing extensions, understandably most costly but technically feasible
· The composite material was suspected as a contributory cause to 2001 aircraft crash in New York leading to further regulatory scrutiny.
· The project focuses on very much cost deduction and fuel efficiency improvement which greatly effects Boeing’s operating cost
· Airbus declared 7E7 a salespersons dream and engineer’s nightmare.
This project once completed gives Boeing an advantage over its competitors as well as add technological superiority to penetrate a rapidly growing market. The 7E7 was intended to replace the 757, 767 and A300 and even the successful A330. In the United States, almost every major airline was operating a large fleet of 757/767 aircraft, American Airlines also operates a large fleet of A300-600’s which will be due to replacement in coming years. Also, Delta and United Airlines were also the focused customers for similar reasons making US main target market for Boeing 7E7. Japan is another potential market where Boeing can do large business as most Japanese airlines operate sizeable fleets of 767.
Large projects like 7E7 require a considerable amount of consideration on so many levels as there is so much at stake i.e., money, reputation, competition etc. Boeing had to put serious thoughts into this project as the developing cost could exceed $10 billion. Such large cash outflows require a number of decades to recover. There are multiple risks to consider such as competitive pressure, the product being duplicated, and uncertainties of order and plane specifications. However, the long-term outlook looks promising as cycle will smooth out, prospects of international trade, technological advancements, better network services and lower fares should enhance aircraft demand. According to Boeing’s market outlook, economies will grow annual by 3.2% and air travel will continue with GDP by the growth of annual rate of 1.5% in the next 20 years all of which adds to the positive outlook for this project to be carried out.