Can Boeing Keep Flying High? Essay

3416 words - 14 pages

The Boeing Company has been critical to the United States for over 60 years in both war and peace.During World War II, it produced the B17 and B29 bombers that were the heart of the military bombing campaign against the Axis powers.In 1958, the 707, Boeing's first successful civilian passenger plane, began commercial operation and was so successful that 348 of that model are still flying today.When in 1969 Boeing came out with its long-range 747 jumbo jet, the company became the largest exporter of any corporation in the United States.During the 1990s, the company underwent rapid expansion, acquiring Rockwell International, a major aerospace and defense company in 1996, competing aircraft manufacturer McDonnell Douglas in 1997, and Hughes Aircraft, a leading space and communications company in 2000.Today, with over 180,000 employees, Boeing is a giant producer of passenger planes, business jets, fighter planes, helicopters, flight instruments, and even satellites and missiles.Although Boeing is a major force in the aerospace, defense, and communications industries as well as the commercial airline industry, its path to growth and prosperity has become clouded.In its commercial airline business it faces a formidable competitor. Airbus Industrie had been established in 1971 by the British and French governments and was immediately subsidized by these governments. In 1996, Airbus decided to challenge Boeing for the jumbo jet market, then ruled exclusively by Boeing with its 416-seat long-distance 747-400.Airbus predicts air travel will expand rapidly during the next decade, requiring many giant jumbo jets. Its Airbus A380 seats 555 passengers, and is the world's largest jetliner. It features a full double-deck rather than the 747's shorter second story "hump," and later versions could eventually be stretched to accommodate over 650 seats. The A380's major benefit would be that by carrying more passengers, it will not require additional landing slots at the overcrowded hub airports. Moreover, Airbus claims the operating costs for its A380 will be 17 percent lower compared to the Boeing 747. Airbus, as a newer company, could also build more modern technology into its planes. Its cockpit designs are similar in all of its jets, so pilots need only a few days of extra training to fly another model. Airbus has steadily taken market share away from Boeing, and by 1999 had surpassed Boeing in the number of planes sold.At first, Boeing decided to compete with Airbus in the giant jumbo jetliner market by "stretching" its existing 747 at a development cost of only $3 to $4 billion, far lower than the $12 billion price tag for developing the Airbus plane.In March 2001, however, Boeing withdrew from the competition. Its management developed a very different vision of the market for jumbo jets.Boeing's management foresees a turn to smaller airliners that will fly close to the speed of sound, enabling passengers to fly nonstop from departure to destination,...

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