Will Boeing Introduce Sonic Cruiser Again
Boeing'southward Astonishing Sonic Cruiser It was supposed to alter the style the globe flies. Instead the world inverse.
(FORTUNE Magazine) – When Boeing publicly unveiled an artist'south rendering of the Sonic Cruiser 21 months agone, the company bragged that its new plane "will change the way the world flies." Capable of transporting 225 passengers at shut to the speed of sound, the Sonic Cruiser is the commencement original jetliner blueprint in 50 years. Information technology looks like nothing else in the skies today. Protruding behind the cockpit are 2 pocket-size wings, known as canards. A large delta wing in the rear replaces the usual swept-back appendages. A pair of powerful engines is mounted in dorsum likewise, and completing the Star Trek look are 2 vertical fins that are used in identify of the conventional tail and rudder. If annihilation could lift air travel from mass to class, this was going to be it.
But the Sonic Cruiser won't be taking off after all. The problem is, no one seems to desire to buy the plane. Not a single airline has stepped up to say that the time saved by flying so fast is worth the higher toll, greater fuel costs, and schedule disruption. So Boeing is backing away from the project, laying the blame on a weak market and shifting customer preferences. An official announcement is expected as soon as year-end.
In place of the Sonic Cruiser, Boeing probable volition offer a far more conventional plane, one that will cost less to build, require fewer changes in service procedures, and burn up to 20% less fuel. Like every other commercial jetliner (except the money-losing SST), the new model volition exist a linear descendant of the B-47 that kickoff flew after World War Two. In other words, information technology won't have rocket-ship styling or sound-barrier speed, but it volition be much more marketabble in today'south atrocious business conditions. Boeing blandly calls information technology the "super-efficient plane."
In interviews in mid-Nov, elevation Boeing executives insisted they were withal trying to make up their minds about which plane to build. "The process of getting to a new airplane is a tortuous road," says chairman and CEO Phil Condit. "By the cease of the year we volition have arrived at a decision about where we think we ought to go." In fact, the decision has already been made. While Condit and others believe that some airline travelers are willing to pay a premium for meliorate service--an argument for the Sonic Cruiser--they concede that airlines have never been in such bad shape financially. It is articulate that customers will opt for the more than economic plane. "With the slowing global economy and the terrorist overhang, the airlines conspicuously need to simplify their armada," says Alan Mulally, the caput of Boeing's Commercial Airplanes. "Their cost structure just leads them to something that will improve operating efficiency."
Scrapping, or at to the lowest degree delaying, the Sonic Cruiser may exist a no-brainer from a business organization standpoint, but it could plough out to be a public-relations disaster. Afterward all, information technology was Boeing that created heightened expectations for the airplane in the start place, then failed to dampen them when it became clear that the plane was only unsalable. Worse, the Sonic Cruiser volition go downwards as nevertheless some other failed airplane for a company that has had its share of them lately--notably the Joint Strike Fighter and the 747X superjumbo--raising suspicions that Boeing has lost both its courage and its touch. And maybe most pregnant, it will be a huge heave for archrival Airbus, which has been raining on the Sonic Cruiser'southward parade from the start.
The questions surrounding the ambitious project aren't likely to die along with the airplane. Was the Sonic Cruiser ever seriously intended for production, or was it partly a newspaper plane aimed at keeping Airbus off balance? If it was for existent, why didn't Boeing grasp its shortcomings more quickly? And why has the company kept the projection alive for the past several months when it was articulate that the futuristic aeroplane was on life back up?
The delay is specially odd given Condit's efforts to inject business organisation discipline into commercial aviation and insulate the rest of the company from that sector's ups and downs. Since taking over in 1996, the down-to-earth Condit has strengthened Boeing'due south investments in military aircraft, missile systems, and space-related businesses like the space shuttle. In 2001 he moved Boeing's corporate headquarters to Chicago to get it out from the shadow of the plane-building business organization in Seattle. The upshot is that in 2003, commercial planes will account for less than half of Boeing'south acquirement, vs. 75% in 1996.
The downturn in air travel is taking its price on the company notwithstanding, and almost analysts don't expect an firsthand upturn. Used to building upward to 48 airplanes a month, Boeing is now assembling fewer than 24. And then after record profits in the past 2 years, Boeing's per-share earnings are expected to autumn more than 20% for 2002 and another 20%-plus in 2003. Even a state of war with Iraq won't help Boeing's sales of big-ticket defense systems, says Condit.
Despite initial cheers from aviation experts, the Sonic Cruiser turned out to exist the wrong plane at the wrong fourth dimension. Globe air traffic has fallen well-nigh eleven% in the past two years, and the airlines are expected to lose nearly $10 billion in 2002 after dropping $12 billion in 2001. Airlines everywhere are in disarray as the future of air travel turns into a tug of state of war between traditional, total-service, hub-and-spoke carriers and upstart, no-frills, indicate-to-signal airlines. "Airlines accept no choice but to reinvent themselves," says Nicole Piasecki, Boeing's vice president for strategy.
The Sonic Cruiser might have but added to the industry'due south problems. Its shape, speed, and cost would require air carriers to do everything from rewriting their schedules to overhauling their maintenance and service procedures. At the same time they would exist forced to sell more than total-priced fares to pay higher operating costs at a time when business and leisure travelers want bargain rates. For all its glamour, the airplane simply never seemed to make much business organization sense. Says disinterestedness analyst Nicolas Owens of Morningstar: "I call back if Boeing built this thing, it would accept become its Vietnam."
Even its birth was star-crossed. Boeing announced plans for the plane on March 29, 2001, the aforementioned twenty-four hours that it acknowledged canceling development of a larger version of the venerable 747, known as the 747X, which was to compete with Airbus'southward super-jumbo A380--a plane that will behave 25% more passengers than the 747 and is scheduled for delivery to airlines in 2005. The timing immediately suggested to some that the Sonic Cruiser news was released as much to take the sting out of the 747X failure as to launch a genuinely viable program. In the months to come up Boeing would admit that information technology had appear the airplane up to two years earlier than planned because it was set to bear witness the plane to customers and knew the news would leak out.
As theater, though, the announcement was a smash. Shaped like an pointer, the Sonic Cruiser was going to be plenty fast--upward to Mach 0.98, or about 650 miles per hour. That would make it 15% to 20% faster than every other airliner in service except the Concorde SST, which flies at Mach two. In both mission and appearance, it was about as far from the chunky, double-deck A380 every bit any airplane could exist, and it made a forceful statement most Boeing's production philosophy: Smaller planes flying point to point--that is, from 1 city to another--would be more than valuable than giant carriers busing passengers between congested hubs.
Airline executives rushed to endorse the new aeroplane. CEO Don Carty of American Airlines was quoted as saying, "We manifestly meet a utilise for that airplane. Information technology can radically modify our business productivity." An ebullient Richard Branson of Virgin Atlantic declared he wanted to order as many as six of the outset planes. Airbus, meanwhile, publicly disparaged the project in what would plow out to exist a long-running critique. Senior vice president John Leahy said his company had already looked at a like concept and establish that it would price too much more to operate than a conventional plane. He was right, of course, but it would be months before Boeing's customers--faced with shrinking numbers of air travelers--would reach a similar conclusion.
Boeing had been planning the plane for years. Every bit early as 1995 a working group--consisting of researchers in materials, design, engineering, and manufacturing--began exploring new flying concepts. Initially known as the Airplane Creation Process Strategy team, it was renamed 20XX and charged with finding advanced technologies to design and build airplanes. Four years subsequently a squad of about a dozen engineers began work on a new airplane concept, and by fall 2000 they had adult a pattern that looked very much like the Sonic Cruiser. The new airplane was code-named Project Glacier.
Early in 2001, Alan Mulally traveled effectually the earth talking to international air carriers about what new planes Boeing should add to its product line. He mentioned several options, including the 747X. But Mulally really got the airlines' attention when he said Boeing could develop a plane that flew every bit fast as Mach 0.98 and wouldn't eat any more fuel than an existing airliner. The plane would allow full-fare-paying business concern travelers, for whom time is more important than money, to cut an hour off a 6-hour flight to Europe or two hours from a trip to Asia. At the aforementioned time it would enable airlines to squeeze extra daily flights out of their fleet. If the Sonic Cruiser shaved ii hours from a 13-hour flight from New York to Tokyo, it could be turned around and flown habitation the same 24-hour interval, thus making a roundtrip in 24 hours.
Through bound 2001, Boeing connected to feed anticipation of the new plane. Full general Electric, Pratt & Whitney, and Rolls-Royce got to piece of work on the new-generation engines that would be required to propel it. At the Paris Air Show in June, a Boeing supplier predicted that more than 500 Sonic Cruisers could be sold in the next x to 15 years. Mulally did him one amend. He declared that with all of the short- and long-range derivatives, Sonic Cruiser sales could reach several chiliad airplanes in the side by side two decades. Airbus's Leahy, meanwhile, gave Boeing some other public poke by declaring that the new airplane would be neither as fast nor as efficient as Boeing claimed.
By the summer Boeing completed what would be the kickoff of four rounds of meetings with potential airline customers, which were clamoring for a new airplane. Engineers tinkered with the initial design. Having discarded the traditional airliner shape, all but unchanged for five decades, they conducted studies to determine the best location for the landing gear and engine air inlets to limit the chances of harm from foreign objects. They also discovered that the position of the canards would hinder the location of loading ramps and made plans to move them.
Meanwhile, weak economic weather around the earth had already begun to depress airline travel, and after Sept. 11 information technology complanate entirely. Almost overnight airlines doubled the number of planes put in mothballs, from 1,000 to almost ii,000--more than 12% of the world'south fleet. Mulally announced that as many as 30,000 Boeing employees at Commercial Airplanes might lose their jobs by the end of 2002 because of canceled or rescheduled orders.
Yet Boeing pushed ahead with the Sonic Cruiser. It completed the first circular of air current tunnel tests and released new details about the materials--carbon fiber composites and titanium--that would be used in place of aluminum to reduce weight and thus fuel consumption.
By the end of 2001 the first signs of doubt virtually the projection began to creep into Boeing's public statements. Executives acknowledged the existence of some other new aeroplane, code-named Project Yellowstone, that was being developed aslope Sonic Cruiser. It would be the same size--well-nigh 225 seats--and would also exist built of lightweight composites. Just since it would wing at only Mach 0.8 to 0.ix, it would burn down up to 20% less fuel and brand less noise. Originally designed merely to demonstrate the effect of Sonic Cruiser engineering science on a conventional design, it would quickly presume a life of its own. Yellowstone was the ultimate depression-toll spread, designed to be cheap rather than fast.
In February evolution of both planes was consolidated under ane man, Walt Gillette, a veteran aerodynamic engineer. Gillette, 61, had been involved in every new Boeing airliner since the 747, including the ill-fated 747X programme, and he was very conscious of the possibility of failure. He keeps a nautical chart in his office to remind visitors that new-airliner programs sank manufacturers similar de Havilland and Lockheed. By contrast Boeing had successfully developed x planes in a row going dorsum to 1958, and he was determined to keep the streak intact. "Going ten for eleven," said Gillette, "isn't acceptable."
In February and March, Boeing conducted a 2nd circular of private meetings with nearly ii dozen customers. They got their beginning expect at Project Yellowstone, now called the super-efficient airplane, only as they were beginning to have 2d thoughts about the Sonic Cruiser. Information technology was at present clear that the Sonic Cruiser would throw flight schedules into disarray. Planes leaving Asia for London would arrive at Heathrow several hours before the 5 a.thou. curfew was lifted. Passengers flying overnight from New York to Europe would get an hour less sleep on what was already a short flight. Meanwhile a report asserted that Boeing was being forced to presume premium ticket prices to showtime the college cost of operating the Sonic Cruiser. An unnamed airline executive was quoted equally being skeptical that the fourth dimension savings offered by the plane would be worth the actress price.
By April, Boeing was notwithstanding having problems developing its business organisation case for the Sonic Cruiser; strategist Piasecki said one might not be completed for another 9 months. After more than a year of work the company still hadn't figured out how much value the airlines would place on actress speed.
At the Farnborough Air Show in England in July, yellow caution flags began flying all over the Boeing chalet. With the third round of client meetings completed, a Boeing executive admitted that potential buyers were confused near whether they wanted the plane and that Boeing wouldn't proceed unless the project "makes sense." Other executives conceded that at that place had been less interest in the Sonic Cruiser since Sept. eleven, and that greater attention was being paid to alternative designs. Gillette raised the possibility that the super-efficient plane might be launched together with the Sonic Cruiser "if sufficient market interest continues." It wasn't much of a vote of conviction.
In fact the market wasn't much interested in spending money on anything--old or new--at that point. Boeing disclosed that because of rescheduled or canceled orders, it now expected to deliver no more 285 new airplanes in 2003, down from the 527 that went to customers in 2000. Since government-subsidized Airbus was scheduled to deliver 300 planes, it would laissez passer Boeing for the first time and attain the position of manufacture leader.
One past one, potential customers began nervously backpedaling. Singapore Airlines' chief, who once foresaw "very big demand" for the Sonic Cruiser, reportedly shook his head when its name was mentioned. A People's republic of china Pacific executive said a cheaper plane "may be a better route to become down." Branson ignored the Sonic Cruiser entirely and declared that the Airbus A380 was the moving ridge the future. There were other concerns also toll. A Japan Airlines executive worried about ground safety considering one of those brusque fins might interfere with a passenger jetway.
In response Boeing did a lilliputian backpedaling of its own. Gillette publicly revealed that Boeing had been working on the superefficient aeroplane earlier the Sonic Cruiser but hadn't told customers near it until the second round of meetings. He insisted that the Sonic Cruiser was still his first priority but said that the virtually important matter was to build the right airplane. "We have never gotten it wrong," he said. "I do not intend to get information technology incorrect on the last airplane I become to do." Airbus was waiting to pounce. Chairman Noel Foregard needled Boeing: "Nosotros think airlines wait inexpensive and clean airplanes, and now our competitor is saying the same."
By autumn Boeing began to audio equally if the decision on the Sonic Cruiser had been taken out of its hands. Gillette said Boeing would practice what the marketplace wanted because "the market was in accuse." CEO Condit declared that the Sonic Cruiser and the super-efficient airplane were in a horse race and that the company would pick 1 or the other. Boeing was sounding less like the pioneering company that had pushed ahead with the 747 on the basis of a single guild and more than similar Procter & Gamble test-marketing a new detergent.
Despite all the bad news, Gillette continued development work dorsum in Seattle. He completed a second round of wind tunnel tests and a quaternary round of customer meetings. Boeing ran more analyses to determine how airlines could all-time use the faster plane in their service networks, but the results were but preliminary and required more than written report. The numbers connected to elude its analysts. CFO Michael Sears conceded, "We're having a problem with the business example." At the end of Oct, Boeing invited customers to Seattle to discuss the plane for a fifth time, this fourth dimension in a group meeting. Some Boeing executives were already talking virtually the plane in the past tense. "If we hear interest in a more than efficient plane, it doesn't mean in that location will never be a Sonic Cruiser," said one.
The decision to halt development of the Sonic Cruiser, which could come on the eve of the 100th ceremony of the first manned flight, would mark another important date in the history of the Jet Age. Henceforth progress will be measured in tiny steps rather than behemothic leaps. Instead of higher and faster, the mantra for the future will be leaner and cheaper. A big part of the change will be driven by Boeing, where Condit believes that enhancing shareholder value takes precedence over exploring the wild blue yonder. Says analyst Richard Aboulafia of Teal Group consultants in Washington, D.C.: "The good sometime days of betting the visitor on a new airplane take been torpedoed past the capital markets. Airlines today don't want anything but commodities, and everything is replacement applied science."
For Boeing, canceling the project is conspicuously the correct business determination but will bargain another accident to visitor morale. Employees were badly shaken when hijackers turned 4 Boeing airplanes into weapons and flew them into the World Trade Center and the Pentagon. Retirement funds have been hard hit past Boeing stock, downwards nearly 40% from its year'south high. Both inside and outside the company, many will conclude that by declining to produce the Sonic Cruiser, the company has abandoned its historical mission to build "the adjacent great flying machine."
Having failed to build its radical new plane, Boeing at present must scramble to remain competitive. With Airbus preoccupied with getting its A380 set up for commitment, Boeing has a chance to pile up orders for the super-efficient airplane and tighten its grip on the point-to-point airliner market place. But to capitalize on that opportunity, information technology will have to motility more rapidly than it has in the contempo past. The airliner business may but be a two-horse race, only Boeing is running 2nd for the first fourth dimension in its history--and the Sonic Cruiser has cost it lots of precious time.
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Source: https://money.cnn.com/magazines/fortune/fortune_archive/2002/12/09/333457/index.htm
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