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The Honolulu Advertiser
Posted on: Sunday, September 20, 2009

Boeing finishes work on larger 747


By Dominic Gates
Seattle Times

SEATTLE — While Boeing struggles to fix and fly its 787 Dreamliner by year-end, another new jetliner from the company looks certain to get into the air sooner.

In the Everett, Wash., wide-body plant late last month, inside the first 747-8 — the new, larger version of the 747 jumbo jet — mechanics made finishing touches on the interior as a technician in the cockpit gave the flight controls a workout.

Boeing intends to get the 250-foot giant into the sky this fall.

Program chief Mohammad "Mo" Yahyavi says he aims to have not one but all three of the test-flight 747-8s flying by the end of the year. The three planes will be finished 20 workdays apart, so the first needs to fly by early November to meet his timetable.

That would be a huge morale boost for Boeing's Seattle-area work force.

The 747-8 is a traditionally built Boeing airliner, the anti-787. Its wings are designed and built in Everett from pieces fabricated in Auburn, Wash. Its fuselage is entirely assembled in Everett.

The only problem: Unlike the Dreamliner, the 747-8 doesn't have a lot of sales yet.

Yet, Boeing has faith there's still a place in the market for its iconic jumbo jet, immediately recognizable by the hump of the forward fuselage.

"It's a beautiful airplane. It's an airplane that will be really successful," Yahyavi said. "Boeing decided this is a good business, and we have to go forward with it."

That's a bold gamble.

Customers have ordered only 105 of the freighter and passenger models, compared with 850 Dreamliners. Only Lufthansa has ordered the passenger version.

And near-term sales prospects are poor amid a global aviation downturn that has most airlines looking to cut capacity, not buy new planes.

Boeing last year booked a $685 million charge for the 747-8 program, acknowledging the company will lose at least that much in producing the jet based on its current projection of firm sales.

And that loss factors in only production expenses, not the additional $3 billion to $4 billion Wall Street analyst Joe Campbell of Barclays Capital estimates Boeing spent on research and development for the 747-8.

Boeing's heavy investment in the program is clear in a nearby assembly bay, where mechanics build the 111-foot wing spars on complex new machines that automatically drill all the holes for fastener insertion.

Will the jet make money in the end?

Analysts believe Boeing could sell around 400 of the new jumbos over 15 years or so. That would be worth about $65 billion in revenue, according to market estimates by aircraft valuation firm Avitas — enough to earn a profit on the investment.

"That's conservative," said Michel Merluzeau, managing partner with Kirkland, Wash.-based aerospace market-intelligence firm G2 Solutions. "It's achievable."

Stretched 18 feet longer than the previous 747-400 model, the passenger version of the 747-8 adds 51 seats for a total capacity of 467. The freighter version offers 26 percent more cargo volume.

Rival plane-maker Airbus dismisses the 747-8 as a derivative of an aging design, eclipsed by the European company's much bigger and all-new superjumbo, the A380, already in service with three major global airlines.

But Boeing executives see a product gap between the 525-seat A380 and Airbus' proposed 350-seat A350-1000, similar in size to Boeing's 777 and due in 2015.

Merluzeau said some carriers will hold off on buying the massive A380 because only the biggest airports can handle it, whereas most international airports are equipped to handle the 747.

While the 747-8 is not an all-new airplane, he believes that as airlines gradually replace the more than 800 older 747s in service, the new version is refreshed enough "to dissuade some airlines tempted by the A380."