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...

[haze]

Originally Posted by dbaker

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

That's just a typo on my part, sorry. If you'll notice on all of my previous posts I always include the entire -700 or -800 instead of the shorter "736" or "738". I simply meant to type "737" and hit the "9" instead of the "7".

By the way, the 737-700 has a range of @ 3,300+/- miles give or take a few. From Boston (one of AirTran's rapidly expanding "mini-hubs") the 737-700 could reach most of Western Europe including Great Britain, Spain, France, and Germany. The Boeing website has a Macromedia Flash page with each "next gen" model's global coverage mapped out in convenient colored circles

[haze]

Originally Posted by dbaker

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.

I'm not underestimating anything. AirTran said they're looking to Europe, not me. That's not some sort of a "wish-list" of mine, those are AirTran's statements published in an article I read a few months ago. I was simply pondering their aircraft choices for those routes, since we were on the subject of the switch from the 717 to the 737.

I'm fully aware of the complexities of entering the European market, specifically the financial risks involved when exposing an airline to trans-Atlantic factors. AirTran has never had to face those factors, which is part of why they're so successful. But no low-cost airline has ever climbed that mountain before, AirTran just may be the first and end up changing the way the game is played.

International partnerships? AirTran hooking up with EasyJet sounds like a pretty intriguing proposition to me

[mduell]

Originally Posted by haze

By the way, the 737-700 has a range of @ 3,300+/- miles give or take a few. From Boston (one of AirTran's rapidly expanding "mini-hubs") the 737-700 could reach most of Western Europe including Great Britain, Spain, France, and Germany.

Is the 737-700 ETOPS certified?

With AirTrans history of in-flight fires, I'm not sure I'd want to hop the pond on them...

[jetmech717]

welcome to the convo mr Duell. I know that we will not have an ETOPS program for our 737's at this time, and I cant really tell you if it is certified for ETOPS (check Boeings site). With that being said.......
Mduell:

With AirTrans history of in-flight fires, I'm not sure I'd want to hop the pond on them...

For the record Mr. Duell, AirTran has NEVER had a 717 inflight or on the ground fire, and you can take that to the bank...I dare you to tell me other-wise. So since that is all that we fly and they are brand new and most are still under warrenty.....I think its safe to say that AirTran's past HISTORY is exactly that...HISTORY. Please move on. I hope you ride a bike and are a better student than you are a fact finder.....you guys are killing me...

History of in-flight fires.

Yeah no other airline has ever had smoke in the cabin. We have already had this discussion so go ahead and read up on everything and then come back and talk to me.

[mduell]

Originally Posted by jetmech717

For the record Mr. Duell, AirTran has NEVER had a 717 inflight or on the ground fire, and you can take that to the bank...I dare you to tell me other-wise. So since that is all that we fly and they are brand new and most are still under warrenty.....I think its safe to say that AirTran's past HISTORY is exactly that...HISTORY. Please move on. I hope you ride a bike and are a better student than you are a fact finder.....you guys are killing me...

Yeah no other airline has ever had smoke in the cabin. We have already had this discussion so go ahead and read up on everything and then come back and talk to me.

Perhaps I should have said "smoke in the cabin" instead of "fire".

But as the saying goes, where theres smoke theres fire. Its not like the smoke is magically showing up from some non-fire source.

From reading the NTSB reports AirTran seems to have them unusally often, given the small size of their fleet.
Would the NTSB reports even be filed if it wasnt an in-flight fire? If I recall correctly, the reasons for filing an NTSB report are serious injuries, substantial damage, in-flight fire, sick crewmember, or flight control system malfunction/failure.

[jetmech717]

MDuell, your telling me that if your t.v. tube goes out, or your monitor, or your desktop computer fries the board and it sends that electrical burning smell throughout you house that you had a fire in your house. I didnt think so. the few occurances on the 717 were when the LRU fried itself internally, now you let that smell get in the air and see how quick it gets pumped throughout the plane. So I guess in this case were there's smoke there's??????? not fire.

[BovineOne]

Originally Posted by jetmech717

your (sic) telling me that if your t.v. tube goes out, or your monitor, or your desktop computer fries the board and it sends that electrical burning smell throughout you house that you had a fire in your house.

The fact that anything is malfunctioning on an aircraft that has been entrusted with the lives and safety of hundreds of passengers per flight is frightful.

[jetmech717]

You need to face reality Bovine, and realize that airplanes are man made machines, and have become more and more like giant computers. For you to think that they never malfuntion is ignorrent. Please wake-up and face the real world. Why do you think every airline has mechanics?

[haze]

This is the latest on Boeing's website:

Boeing Committed To 717 Program And 100-Seat Market
Brief key facts about the airplane, market, economics and future

Boeing has affirmed its commitment to the 717 program and the 100-passenger market by announcing it will continue production of the airplane at its Long Beach, Calif., final assembly facility. This reaffirmation of the 717 follows a detailed evaluation of the program's economics and the 100-seat airliner market...The efficient 717 is meeting or exceeding all expectations in revenue service. It is the best 100-passenger airplane for short-haul, high frequency routes.

Boeing believes in the 717, despite less-than-expected order activity for all 100-seat airplanes in the past several years. This market remains fertile, but it has developed slower than forecasted. Boeing plans to stay the course because it recognizes that the 717 is the right product to fulfill airline needs.

Market

There is a requirement for about 3,000 airplanes with 90 to 110 seats over the next 20 years. Boeing believes it can capture a good share of this sizeable market. Potential customers include at least three types: mainline carriers replacing aging DC-9s, F28s and 737-200s; regional airlines flying turboprops or small regional jets but are ready to move up; and low-cost airlines that benefit from the 717's low operating costs and great reliability.

Economics

The 717 earns money for airline customers because costs are low. It has significantly lower cash operating costs than the A318, more than 13 percent less on a typical 300-nautical mile flight. The 717 is also highly competitive with the Embraer 195 and Fairchild Dornier 928, both of which are years ahead away from entry into service.

Future

Boeing announced that it wanted to take a fresh look at the 717's market because of the current difficult airline environment. The company has come away convinced that the 100-seat market will recover and flourish. The 717 is a great product for that market, and it is here to stay.

I read the words "convinced", "committed", "reaffirmed", "stay the course", and "it is here to stay" in that press release. I wouldn't be so quick to bury the 717 just yet. Regardless, it will serve as a wonderfully economical regional "feeder" jet for AirTran's larger and longer range 737-7s and 737-8s, and possibly even the 7E7 several years down the road. Why purchase the CRJ which hauls 50% fewer passengers or the A318 which has 15% higher operating costs than the 717. Memphis to Atlanta on a brand new 717, Atlanta to L.A. on a brand new 737-7, NYC to London on a brand new 7E7. Sounds like a pretty efficient plan, I wonder if AirTran will bite at Boeing's bait on the 7E7...

By the way, I've scanned through the SEC filing a couple of times and can't find the part about Boeing ditching the 717. Could someone please point out that exact section for me, I'm lost there

[haze]

Originally Posted by haze

By the way, I've scanned through the SEC filing a couple of times and can't find the part about Boeing ditching the 717. Could someone please point out that exact section for me, I'm lost there

I did find this in the Seattle PI though:

In a recent filing, Boeing reported what it said was a $250 million "forward loss" on the 717 since it had not reached the 200 orders initially projected for the program. Boeing has won 153 orders for the plane.

If Boeing decided to go ahead with the 717-300, it would do so at a time when its commercial business is focused on developing an all-new super-efficient jetliner dubbed the 7E7. This plane would replace the 767 in the middle of the market.

For now, however, unlike every other Boeing jetliner in production, the 717 has no family members.

It remains to be seen whether that changes, or whether the 717 even survives.

Phillips is not certain of the former, but convinced of the latter.

"This part of the market (for 100-passenger jets), has been pretty tough," he said. "But you talk with customers and they are very pleased with the 717. . . . I'm optimistic that when the upturn comes this plane will be getting recognized.

So Phillips, the head of Boeing's 717 team, is covinced that the 717 will survive. Even after the SEC Filing...