Boeing - Past, Present and Future
(A Review at the Year End of 2001)

Based on a presentation at SCAAE (Society of Chinese American Aerospace 
Engineers)

by C. C. Tien

	In the summer of 2001, the global economic downturn became widespread and 
many airlines put a hold on their airplane orders. The tragic events of September 11, 2001 dealt a devastating blow to air travel and also to the Boeing commercial aircraft business. Boeing announced on September 18, 2001 that it might be forced to lay off 30,000 workers by the end of 2002 and that 2001 commercial-jet deliveries would be greatly reduced. Shortly afterward, many airline orders were delayed or canceled. Based on the revised production schedule issued to suppliers in October 2001, Boeing will be building only half as many commercial jetliners in Seattle, WA in late spring of 2002. This trend will continue in 2003.

	On December 14, 2001, 5000 positions in the Greater Seattle, or Pugent Sound, area were gone. That same day, BCAG president Alan Mulally appeared on a radio talk show to answer questions about the future of BCAG and confirmed that the total lay-off would be 25,000 - 30,000 by the middle of the next year.  The news in October 2001 that Boeing lost the JSF contract did not help the situation at Boeing and will be particularly tough on the Boeing Military Airplane Group in St. Louis.The fate of the Boeing 717 program, formerly the MD-95, has been hanging by a thread for the last several months due to a shortage of orders. 

	Boeing has received 137 orders for the 717 to date and has delivered 88 already. After careful examination of all factors, Boeing decided to continue producing the 717 jetliners in Long Beach, Calif. Pressure from the operators was an important reason while the potential fallout for Boeing Capital of dropping the 717 may have been another factor.  Boeing Capital Corporation, the financial arm, provides funding for airlines to buy planes. It has $1.37 billion tied up in loans and leases on 65 717 jetliners in service. "Termination of the program could adversely impact the collateral and residual value of these aircraft - such impacts could be material." the company said. Though the line is expected to stay open, 
the production rate could fall from around three planes per month today to just one a month by next year, adjusting for dwindling orders.

	Boeing is currently under contract for 120 C-17 by 2004 and could sell 60 more C-17 transports to the Air Force through 2007 under a Pentagon plan approved in mid-December 2001.  The collapse of a C-141 wing during routine fueling on December 22, 2001 will put a new emphasis on the C-17 production line in Long Beach, Calif., which employs about 8,000 workers. The average Air Force tanker is more than 40 years old, and Congress spends $100 million annually to install new engines on the fleet of about 500 planes. Most of the tankers are KC-135s, built on the 707 platforms. 

	In August 2001, Boeing submitted an unsolicited proposal to the Pentagon for reconfiguring 767 to replace the tankers. September 11, 2001 made the proposal a priority.   767 tankers were then included in the defense budget.    Meeting with the reporters in November, Gen. John Jumper, chief of staff of the Air Force, said the old tankers were performing at a reliability rate below 78% and that upgrading would bring the rates up to 95%.  A new wide-body platform offers the opportunity to build a "smart tanker" equipped with surveillance devices as well as new command-and-control aircraft.  House and Senate negotiators sealed the deal on a $20 billion plan to replace old tankers with new 767s on December 18, 2001. (Part 3 of 4, to be continued.)