Dec. 12, 2022, © Leeham News: The 1,574th Boeing 747 rolled off the production line last Tuesday. The last one, after 53 years of continuous production. The iconic aircraft was known as the Queen of the Skies.
The larger A380 didn’t replace the 747. McDonnell Douglas’s DC-10 and MD-11 didn’t replace it. The Lockheed L-1011 didn’t replace it. Neither did Boeing’s own 777-300ER. And neither will the 777X. The 777-X does not replace the 747—it succeeds the 747. I don’t think that anyone will characterize the 777X as “the Queen of the Skies.” The X looks like any other airplane. The 747 look is unique (a well-worn, overused word that in this case applies) and iconic. It has a nose door. The 777XF does not.
The Queen is Dead. Long live the Queen.
As it turns out, there was a debate within Boeing as far back as 2004 about whether to cancel the 747 program then. The 777-300ER was just entering service. There was a recognition within Boeing that the -300ER was the beginning of the end for the 747.
I tell this story in my book, Air Wars, The Global Combat Between Airbus and Boeing. Also in the book is the story about how Boeing tried to launch the 747-500 and 747-600, without success. Airbus won this competition, launching the A380 with Singapore Airlines and in the process killing the 747 derivatives. But Phil Condit, then the CEO of Boeing, wasn’t upset. Something else was in the hopper.
Below is a synopsis of these stories, excerpted from Air Wars.
Jim Albaugh [a former CEO of Boeing Commercial Airplanes], Scott Carson [another former CEO of BCA], and others admitted the 777-300ER cannibalized the 747. Carson said Boeing debated internally in 2008–2009 whether to launch the -8. Back when the 777-300ER program was launched, entering service in 2004, Boeing knew internally that this was the beginning of the end of the 747. Some argued then to discontinue the airplane. Others said the prestigious airplane was too valuable to give up.
The freighter, with its unique nose-loading door, was needed in only five percent of the service, and the value proposition of the big freighter was declining. The twin-engine 777-200LR was cheaper to buy, cheaper to operate, and, in most cases, better sized for the demand. All too often, loads are directional anyway. With the huge amount of belly capacity in the 777-300ER, A330-300s, and forthcoming neos, the 787 and the A350s, the 747-8F was a hard sell, but it wasn’t impossible. As long as Boeing was going to build the 747-8F, it didn’t cost that much more to develop and build the 747-8I passenger model.
Still, the 8I was a “tweener” airplane. It fell between the 777 and the A380. Had Boeing not encountered two years of delays with the -8, it might have had better sales success given the two-year delay of the A380. Boeing, however, squandered this in the overhang that the 787 debacle had on the 747-8 development and EIS.
In February 2009, The Everett Herald, Flight Global, and Leeham News each reported that Boeing was reviewing the program.
“Boeing is reassessing the viability of the 747-8I,” Leeham News wrote. “But we are told this reassessment is a full program analysis that includes whether to continue development of the freighter, with production at a slower rate than originally envisioned; to cancel the passenger version, or to cancel the program entirely.” Cancelation was unlikely once the program was underway, and Boeing ultimately continued.
In its 10-Q filing with the SEC for the second quarter of 2016 Boeing acknowledged the end was on the horizon. “Lower-than-expected demand for large commercial passenger and freighter aircraft and slower-than-expected growth of global freight traffic has continued to drive market uncertainties, pricing pressures, and fewer orders than anticipated. As a result, during the second quarter of 2016, we canceled previous plans to return to a production rate of 1.0 aircraft per month beginning in 2019,” Boeing wrote.
Boeing wrote off $1.19 billion in the quarter. It previously wrote off $885 million and $70 million during the second half of 2015 and the first quarter of 2016. “If we are unable to obtain sufficient orders and/or market, production and other risks cannot be mitigated, we could record additional losses that may be material, and it is reasonably possible that we could decide to end production of the 747,” wrote Boeing. The company gave up on the -8I but limped along with the freighter at a rate of one-half per month until July 2020, when it announced the last one would be delivered in 2022.
A380 vs 747-500/600
The campaign to launch the A380 at Singapore Airlines pitted the A380 against the Boeing 747-500/600. This was a stretch concept with added range and other improvements. The -500 would seat 462 passengers. The -600 would seat 548 passengers. It was Airbus super-salesman John Leahy against Ray Conner, at the time Boeing’s vice president of sales for Asia/Pacific.
“Singapore was the kingpin of the widebodies at that point,” Conner recalled. “Whatever Singapore did, everybody would follow. I’m down there with my team bringing in the 747-500, -600. We were just working the heck out of this thing. I’ve got a letter from Phil Condit that says, ‘If you guys buy the airplane, we’ll launch the airplane,’ because we hadn’t launched it yet. Then we start getting down [to] the short strokes, and it’s down to best and final. I’m sitting in the hotel, having lunch and there is Leahy over there with his team getting ready to go in to go to Singapore.”
With Leahy was Airbus CEO Noel Forgeard. “He was bringing in all the big guns,” Conner said. “It’s just me and my team, and I’m down there going, ‘Hey, it would be good if we could get [CEO] Phil [Condit] here if we could get Alan Mulally [CEO of Boeing Commercial Airplanes] or Seddik Belyaman [head of sales] here.’” But Conner couldn’t get them. “I just can’t seem to get anybody to come down there.”
As part of any campaign, Boeing and Airbus would evaluate the performance of the competing aircraft and commercial terms to the extent they knew them through the customer. The two OEMs would denigrate and dismiss the opposing airplane and offer. “We were telling Singapore how the A380 was going to be heavy. We were taking the typical Boeing engineering approach to all these different things, putting all these risks of this big beast on the table,” Conner said. “Singapore used that to throw these risks back at John, and John just said, ‘Well, fine. If that happens, this is what we’ll do.’ Leahy basically took all the risks away that they kept bringing up to him.”
In a sense, Boeing helped sell the A380 to Singapore through this approach. “In typical John fashion, he used our sales pitch against us and took all those things that would be of concern away. He gave Singapore a deal that they couldn’t refuse, or that we were unwilling to match at that point,” said Conner. The airline chose to order the A380.
Conner didn’t come away empty-handed, however. He sold Singapore more 747-400s to bridge the airline to the A380s. Conner thinks Boeing executives really didn’t want to launch the -500/600 anyway. There wasn’t a new engine for the -500/600, which was needed for the larger airplane and for better economics. The wing would be tweaked but not new. And the concept for what later became known as the 787 was already floating around within Boeing.
Conner came home from Singapore devastated. He failed to launch the 747-500/600. Leahy succeeded in launching the A380. When he sat down with Condit, however, the CEO didn’t chastise him. Rather, Condit said don’t worry about it; we have something better. Boeing had two concepts percolating. One was the speedy Sonic Cruiser. The other was a traditional tube-and-wing design, but much more efficient than any airliner flying then.
The Sonic Cruiser was a futuristic-looking airplane. It had similarities to a Super Sonic Transport, which was natural since it was a Mach 0.98 concept. Its economics were pegged as equal to the Boeing 767. The chief attribute was speed, nearly 150 mph faster than the long-haul airliners in use.
The tube-and-wing airplane was the concept that became the 787. At this stage, it was labeled the 7E7.
The excerpts above are just a small part of the story of global combat between Airbus and Boeing. Air Wars looks at 35 years of sales and product strategy moves by the duopoly. It follows the career of John Leahy, who was in Airbus sales for 33 years and the head of sales for more than two decades. Leahy was credited by many as the key to Airbus’ success, though this is a simplistic assessment. Leahy likes to point out that he and his team lost 40% to 60% of the sales depending on the measuring point.
Air Wars begins with the big gamble by Leahy to win a huge order from American Airlines for the A320 family. American at the time was an exclusive customer of Boeing. This deal caused Boeing to launch a re-engined version of the 737, which was branded the MAX.
Air Wars then takes a step back to introduce Leahy while in college and a taxi driver in New York City. From there, the book reports one sales campaign after another, with wins and losses by Airbus and Boeing. The book concludes with the MAX grounding, the COVID pandemic, and finally, the retirement of Leahy, Conner, and other key players.
1 THE MULTI-BILLION DOLLAR GAMBLE
2 FLYING CARGO
4 EARLY YEARS AT AIRBUS
5 HIGH RISK, HIGH REWARD
6 FACING OFF
7 THE DEATH OF McDONNELL DOUGLAS
8 WAKE-UP CALL
9 LAUNCHING THE A380
11 TROUBLE IN TOULOUSE
12 TRY, TRY AGAIN
13 FALLING APART
14 LABOR WARS
15 UPSTART AND DISRUPTOR
16 CREATING NEO
17 LAUNCHING MAX
19 THE X-FACTOR
20 SMASHING A BUG WITH A SLEDGEHAMMER
21 THE BOEING-EMBRAER JOINT VENTURE
22 LAST GASP
23 THE ALPHABET AIRPLANE