Boeing Buckles Up for Takeoff

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Its thrifty new jets may be just what hard-pressed airlines need

If the people of Seattle have some of the best-educated cab drivers in the world, they owe it all to the Boeing Co. During the past two years, caught by the worst downturn in U.S. airline history (estimated 1982 industry losses: $500 million), the giant plane builder has reduced its work force by 14,000 as its production of new commercial aircraft dropped to half of its capacity. But now, thanks to some sharp maneuvering, Boeing's prospects are looking brighter. In the past six months, the company's stock has shot up from 15 to 36⅞, and investment analysts still think it is a buy. Boeing Chairman T.A. Wilson is less effusive than the analysts but still upbeat. Says he: "It will take some time for the airlines to start making money again. But we expect the traffic to grow."

Right now, the trunks are keeping Boeing busy filling orders for its new wide-bodied 767. Boeing has sold 177 of the $46 million, twin-engine planes so far, and will produce five a month this year, which will keep the assembly line moving efficiently until business picks up enough to allow the industry to buy more. United Air Lines, the first carrier to fly the 767, has taken out newspaper ads proclaiming: "If you had a favorite airplane, this one's going to take its place."

That goes for airline executives as well as travelers. Passengers, who have been crammed into planes as if they were suitcases, like the extra leg room, wider seats and the 50% increase in overhead storage space. The carriers, which now include TWA, American and Delta, like the new plane's low operating costs. Narrower than the mammoth 747, the 767 carries 210 passengers and is versatile enough to be used for 1,000-mile flights, as well as transcontinental routes. Thanks to new engines and wings, and the use of lighter composite materials, United says that the 767 is 30% to 54% more fuel efficient than the older planes it replaces. Boeing claims that airlines can save up to $2.5 million annually for every 767 they fly.

Boeing is also beginning to profit from the industry's twin problems of overcapacity in big airliners (as many as 100 747s, DC-10s and L-1011s are grounded because they cannot be filled), and the fare wars sparked by the Airline Deregulation Act of 1978. While the trunks have been slugging it out in expensive discounting duels for a shrinking number of passengers on such popular routes as New York-Los Angeles and Miami-Chicago, small regional airlines, known in the industry as "bumblebees," have been making fat profits serving medium-size cities abandoned by the major carriers. Now the trunks want some of that business back, and to get it they need smaller planes. The most popular: Boeing's new twin-engine 110-passenger 737-200, a fuel-efficient improvement over the older 727s that it usually replaces.