SEC filing indicates Boeing to ditch ugly duckling (717)

[dbaker]

This SEC Filing and this Los Angeles Times article describe the fate of the 717 aka "doomed aircraft," which is clearly not the pride of the Boeing fleet or undergoing any active development as if the name didn't give that away to begin with.

Boeing Co. warned anew Friday that it was considering shutting down its 717 jetliner production line in Long Beach, the state's last remaining commercial aircraft assembly plant, because of slowing sales.

. . .

Boeing inherited the twin-engine 717 program when it acquired McDonnell Douglas Corp. in 1997 and changed the jet's name from the MD-95. The 717, with a list price of $36 million, is the smallest jet in Boeing's line of commercial aircraft.

Two years ago, Boeing quietly considered shuttering the 717 line after the Sept. 11 terrorist attacks pummeled air travel and orders for new airplanes. But Boeing found that the cost of closing the plant, including paying termination fees to suppliers, was too great. So it decided to continue making the plane, albeit at a reduced production rate, analysts said.

. . .

"There have been lot of predictions that it was a doomed aircraft," Nisbet of JSA Research said. "That's the way it's been for several years."

[Delta7203]

I really dont see why Boeing wanted to make the 717 in the first place. The 737-600 is exactly like it.

- John

[dbaker]

Originally Posted by Delta7203

I really dont see why Boeing wanted to make the 717 in the first place. The 737-600 is exactly like it.

The 736 is slightly larger -- big enough to make a difference.

I think Boeing built the 717 to cater to carriers like AirTran that had the short sighted goal of trying to reduce transition and training costs from the DC9. Additionally, it allowed them to compete with the larger ERJs as well as further try justify the MD purchase.

[jetmech717]

Baker says:

I think Boeing built the 717 to cater to carriers like AirTran that had the short sighted goal of trying to reduce transition and training costs from the DC9.

I agree (wow I thought I would never say that) The 717 is what saved AirTran plain and simple! It allowed us to get rid of the DC-9's (most important was that) It also allowed us to keep the smaller planes that cost less to fly but we could also keep full. Boeing didn't plan this though McDonnell Douglas made the plans for this plane with VJ as the MD-95. Of course we know the rest of the story. So now with the short routes taken care of and all the DC-9's gone AirTran can continue its growth plan with the 737-700's and 800's starting delivery in summer. Very exciting times for us right now with the company moving forward with the youngest all Boeing fleet in the world and getting younger with the 737.

[haze]

When asked if he had plans to purchase something like the CRJ, Joe Leonard was quoted as saying AirTran didn't need it because the 717 would become their regional jet. His exact words were more like "We already have the perfect regional jet in the 717." I took that as a forward-looking statement on his part at that time, implying that AirTran would be buying another aircraft type and transitioning the 717 into their regional jet. Now in hindsight, it looks like that's exactly what's going to happen...

AirTran's entire fleet is less than 4 years old, so these 717s will serve their RJ needs for at least another decade. As the 737-700s and 800s increasingly become the backbone of AirTran's routes (like Southwest Airlines), then the 717s will be shifted to a role of increasing flight frequency along the most popular routes as well as serving as their connecting regional jet.

The first order is for 100 737-700s and 800s, they already have more than 80 717s with a dozen or so more on order, and are looking to excercise options with Boeing to purchase 100 more 737s in the coming years. That would put AirTran right around 300 aircraft with 90+ of those being the regional 717. They've also said they're planning on adding international routes (Canada, Mexico, the Carribean, and Europe specifically) in the coming years and I find myself speculating on AirTran's aircraft plans.

With AirTran's emphasis on fuel economy, holding down maintenance costs, and the desire to stick by Boeing's side and solidify their favorable relationship, could the 7E7 be in AirTran's future for those international routes? Probably not, the 739 would be a better fit for those needs. I guess it all depends on just how "Economical" the "E" in the 7E7 ends up being

[dbaker]

Originally Posted by haze

When asked if he had plans to purchase something like the CRJ, Joe Leonard was quoted as saying AirTran didn't need it because the 717 would become their regional jet. His exact words were more like "We already have the perfect regional jet in the 717." I took that as a forward-looking statement on his part at that time, implying that AirTran would be buying another aircraft type and transitioning the 717 into their regional jet. Now in hindsight, it looks like that's exactly what's going to happen...

I find it hard to believe that you would intentionally ever buy an orphan aircraft that's the ugly duckling of the fleet in terms of development and long term sustainability since that's detremental to your ability to continue to operate the aircraft in any capacity.

As the 737-700s and 800s increasingly become the backbone of AirTran's routes (like Southwest Airlines),

Southwest doesn't have any 737-800s and the plurality of their fleet is still the 737-300, the majority still being the legacy 737s (not the next gens).

The first order is for 100 737-700s and 800s, they already have more than 80 717s with a dozen or so more on order

Do you understand that Boeing is looking to get out of those agreements and not deliver more 717s? And that they would have done this years ago if it wasn't so expensive to bail on the 717? That's what the article and SEC filing were talking about.

They've also said they're planning on adding international routes (Canada, Mexico, the Carribean, and Europe specifically) in the coming years and I find myself speculating on AirTran's aircraft plans.

With AirTran's emphasis on fuel economy, holding down maintenance costs, and the desire to stick by Boeing's side and solidify their favorable relationship, could the 7E7 be in AirTran's future for those international routes? Probably not, the 739 would be a better fit for those needs. I guess it all depends on just how "Economical" the "E" in the 7E7 ends up being

Leisure routes to Mexico, the Carribean, and parts of Canada are no big deal since it's just continental north america.

The 737-900 is not capable of crossing the Atlantic to Europe from New York, much less from Atlanta.

Additionally, I think you're underestimating the complexity of offering international routes in terms of airline partnership for connections overseas as well as the fact that the majors have extreme difficulty obtaining gates and landing rights at the busy European airports and largely sustain themselves on the $3,000-5,000 (one-way) business & first class fares to european destinations, which is quite a departure from AirTran's model.

[jetmech717]

For the record...I hope we NEVER! get anthing bigger than the 737 family. The reason most of these majors are hurting so much is cause they cant fill the bigger planes. I would rather keep the smaller ones and make sure they stay full than fly 1/2 full 777's across the world and losing $$$ on it the entire way. By the way Boeing has found no problem in finding 717's for us. We already have TWA's, VelaMex, and now adding ex-Hawwian planes to our origanal fleet. Thats fine by AirTran because I'm sure were getting a good deal on them and the support and warrenties from Boeing also. If they ever talked us into getting rid of the 717 I'm sure it would be a very good deal on another a/c.

[haze]

Originally Posted by dbaker

I find it hard to believe that you would intentionally ever buy an orphan aircraft that's the ugly duckling of the fleet in terms of development and long term sustainability since that's detremental to your ability to continue to operate the aircraft in any capacity.

Well, believe it or not, AirTran does indeed have a fleet of 80+ brand spanking new 717s flying the friendly skies. Flying very efficiently, economically, and reliably I might add. And Leonard did indeed say that about the 717 being an ideal RJ.

Shifting the 717 to their RJ role is probably the result of the emerging orphan status of the product. However, the 717 is a big part of what got AirTran to where it is today regardless of it's future role at the airline. DC-9s, MD-80s, MD-11s, and L-1011s are still chugging along just fine, although McDonnell-Douglas no longer exists and Lockheed got out of the passenger business a long time ago. Delta is just now in the process of retiring those last 1011s, and how long ago did Lockheed stop making them and get out altogether? I'm fairly confident Boeing will remain in the passenger airline business for quite some time and offer support to those existing 717 customers

[haze]

Originally Posted by dbaker

Southwest doesn't have any 737-800s and the plurality of their fleet is still the 737-300, the majority still being the legacy 737s (not the next gens).

I was simply making the point that AirTran intends to make the 737 the backbone of it's fleet like Southwest has done. AirTran's models just so happen to be the -700 and -800, I wasn't implying that most of Southwest's were.

However, that being said, Southwest still has a significant number of the "next gens" in there fleet, and that number is swelling:

Southwest Becomes First Airline To Operate 100 Boeing Next-Generation 737-700s
SEATTLE, April 5, 2001 - The Boeing Company announced today that Next-Generation 737-700 launch customer Southwest Airlines took delivery of its 100th 737-700 on March 30. The milestone comes three years and three months after Boeing delivered the first Next-Generation 737-700 to Southwest in December 1997.

Southwest operates the largest fleet of 737 airplanes in the world.

"Adding to our fleet of Boeing 737-700s has enabled us to continue to grow into new markets, serve more customers, and bring our brand of affordable air service to more people than ever before," said Jim Wimberly, Southwest Airlines executive vice president and chief of operations. "This is a significant day in the history of Southwest Airlines."

This newest airplane is one of 25 737-700s Boeing will deliver to Southwest this year. Another 27 airplanes are scheduled for delivery in 2002, and 26 more in 2003. Southwest has orders with Boeing up to the year 2012.

"Southwest helped to define this airplane, and I can't think of anything more fitting than Southwest being the first airline to take delivery of and operate 100 737-700s," said Carolyn Corvi, Boeing vice president and general manager of the 737 program. "When the Next-Generation 737 program was launched, a key objective was to design airplanes that incorporated advanced technology but would allow for simplicity, reliability and low cost of operation. The 737-700 does all that and more for Southwest, and the airline is able to turn the value it derives into a winning formula for customers, shareholders, and its own employees."

Potato, pototo, AirTran's backbone will be the 737 just like Southwest's

[haze]

Originally Posted by dbaker

Do you understand that Boeing is looking to get out of those agreements and not deliver more 717s? And that they would have done this years ago if it wasn't so expensive to bail on the 717? That's what the article and SEC filing were talking about.

I understand that crystal clear, my misguided friend. I've been following Boeing's every wavering move on the 717 for several years. Do you understand that the whole point I was making was about AirTran's transition AWAY from the 717 and new shift toward the 737? The numbers about the 717 were just that, official numbers. Just stating factual figures, AirTran does have those aircraft and that small number of additional orders does exist. Whether they are filled or not is another question entirely, but that wasn't my point...