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Boeing’s 747 facing uncertain future

Nov. 4, 2013, Chicago, Il. - For decades, the Boeing 747 was the Queen of the Skies. But the glamorous double-decker jumbo jet that revolutionized air travel and shrunk the globe could be nearing the end of the line.


November 4, 2013
By CTV News

Boeing has cut its production target twice in six months. Just 18 will
be produced in each of the next two years. Counting cancellations, it
hasn't sold a single 747 this year. Some brand-new 747s go into storage
as soon as they leave the plant.

 

Boeing says it's committed to the 747, and sees a market for it in
regions like Asia. But most airlines simply don't want big, four-engine
planes anymore. They prefer newer two-engine jets that fly the same
distance while burning less fuel.

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"We had four engines when jet engine technology wasn't advanced," Delta
Air Lines Inc. CEO Richard Anderson said at a recent conference. "Now
jet engines are amazing, amazing machines and you only need two of
them."

 

Delta inherited 16 747s when it bought Northwest Airlines in 2008.
Northwest last ordered a 747 in 2001, according to Flightglobal's Ascend
Online Fleets.

 

Part of the problem is all those seats. A 747 can seat from 380 to 560
people, depending on how an airline sets it up. A full one is a
moneymaker. But an airline that can't fill all the seats has to spread
the cost of 63,000 gallons of jet fuel — roughly $200,000 — among
fewer passengers.

 

They're also too big for most markets. There aren't enough passengers
who want to fly each day between Atlanta and Paris, for example, to
justify several jumbo jet flights. And business travellers want more
than one flight to choose from. So airlines fly smaller planes several
times a day instead.

 

"No one wants the extra capacity" that comes with jumbo jets like the
747 and the Airbus A380, said Teal Group aviation consultant Richard
Aboulafia.


The game-changer

 

The 747 once stood alone, with more seats than any other jet and a range of 6,000 miles, longer than any other plane.

 

The plane was massive: six stories tall and longer than the distance the Wright Brothers travelled on their first flight.

 

On the early planes, the distinctive bulbous upper deck was a lounge,
so it had just six windows.

 

The plane epitomized the modern age of
international jet travel.

 

"Everyone on the flight was dressed up," recalls passenger Thomas Lee,
who was 17 when he took the inaugural passenger flight on Pan Am from
New York to London in 1970. "After all, it was still back in the day
when the romance of flight was alive and thriving."

 

International travel was mostly limited to those who could afford the
pricy flights. The 747 changed that. The first 747s could seat twice as
many passengers as the preferred international jet of the time, the
Boeing 707. Long flights became more economical for the airlines. Ticket
prices fell and soon a summer vacation in Europe was no longer just for
the wealthy.

 

The plane's profile was enhanced by its role as Air Force One and by
flying the space shuttle — piggyback — across the country. The 747
became the world's most recognizable aircraft.

 

Boeing began building 747s in the late 1960s. Production peaked at 122
in 1990. Overall, Boeing sold a total of 1,418 747s before redesigning
the plane in 2011. The 747's success helped put Boeing ahead of U.S.
competitors Lockheed, which left the passenger jet business in 1983, and
McDonnell Douglas, which Boeing acquired in 1997.

 

But technology eventually caught up with the 747.

 

As engines became more powerful and reliable, the government in 1988
started allowing certain planes with just two engines to fly over the
ocean, as far as three hours away from the nearest airport. Within a
decade, twin-engine planes like the Airbus A330 and the Boeing 777 began
to dominate long-haul routes.

 

Passenger airlines have ordered 31 747-8s, the current version of the
plane. By comparison, airlines have ordered 979 of its smaller but
ultra-fuel-efficient 787 Dreamliner.

 

The cost is a factor. The 747 is Boeing's most expensive plane with a
list price of around $350

million, compared with $320 million for
Boeing's biggest 777.

 

"Several" brand-new 747s have gone into storage, the company said, "to balance production and delivery rates."

 

At least the President of the United States still prefers to fly around in a jumbo jet.

 

Air Force One is the world's most visible airplane. The two modified
Boeing 747-200s that do the job now will be 30 years old in 2017. The
Air Force is seeking a four-engine replacement, making the Pentagon one
of the last airplane shoppers eager to buy fuel for four engines instead
of two. Boeing and Airbus are the only Western jetmakers with such a
plane.

 

Boeing has said it wants the job and has responded to a U.S. Air Force
request for information. Airbus has not. The European company was widely
assumed to be at a disadvantage against an American planemaker.

 

It's also possible that another company would buy planes and modify
them to be used as Air Force One. An Air Force spokesman confirmed on
Monday that it received multiple responses, but no date has been set for
discussing the project with potential bidders.


Impact on Boeing

 

Boeing says that slowing 747 production won't have a significant financial impact.

Boeing's stock hit an all-time high of $129.99 on Wednesday. It has
gained 74 per cent so far this year, more than four times the gain in
the Dow Jones industrial average.

 

Boeing has a backlog of some 4,787 planes, most of that orders for the
bestselling 737. It has sped up production of the 737, as well as the
777, and plans to boost its output of 787s in 2016. Boeing gets the bulk
of the money from a new plane upon delivery, so faster deliveries mean
better cash flow.

 

Boeing is expected to begin offering customers a new version of the 777
by year end. With about 400 seats, that plane is widely expected to
kill off demand for the 747 from passenger airlines, although the
freighter version may survive longer.

 

Boeing isn't giving up on its iconic airplane. Marketing chief Randy
Tinseth says the economic downturn of the past five years has hurt 747
sales.

Still, he says, "We think that market will come around."

 

Even if it doesn't, 747 fans can take heart. Most planes last three
decades or more, so there will be some 747s in the skies for a long
time.