Boeing calls halt to $7bn super-jumbo project

Boeing dropped a bombshell on the aviation industry yesterday by shelving plans to build a stretched version of its 747 jumbo jet, claiming that the market was too small to justify the $7bn (pounds 4.2bn) cost of the programme.

The announcement took observers by surprise and, for the time being at least, leaves Airbus Industrie as the only jet manufacturer preparing to launch a super-jumbo.

The proposed 747-500X and 600X family of jets would have been capable of carrying 550 passengers - 140 more than the biggest 747 currently flying - and would have entered service in 2001. The aircraft would have cost $210m. The Airbus A3XX family has a payload of 555-650 seats and would be priced at $198m.

Despite twice delaying the launch of the programme, Boeing had been expected to give the go-ahead later this year. However, Ron Woodard, president of the Boeing Commercial Airplane Group, said yesterday: "Sufficient market demand has not yet developed to justify committing the significant investment required to develop larger versions of the 747."

Boeing estimates the market for aircraft with more than 500 seats at 470 whereas Airbus puts demand at just under 1,400. Airbus says the A3XX will cost $8bn to build but Boeing claims the cost will be nearer $20bn because it is an all-new aircraft.

Mr Woodard said that Boeing had decided instead to concentrate on developing new versions of its twin-engined wide-bodied family of aircraft the 767 and the 777. All but a small number of the 1,000 or so engineers that had been working on the 747-600X programme are being redeployed to other areas of the company.

Boeing has not, however, jettisoned the super-jumbo altogether, saying it would continue to study airplanes capable of carrying more passengers than today's 747.

"This remains one of the priorities of our product-development efforts," Mr Woodard said. "When the market develops for such an aircraft, we will be ready."

An Airbus spokesman said: "The feedback we have been getting from the market is that airlines are interested in a new technology, state-of-the- art aeroplane. The A3XX can offer that, whereas the stretched 747 does not necessarily fit the bill."

The 747-600X would have been based on an airframe that dates back to the 1960s in design.

In recent months, Boeing had been under increasing pressure from potential airline customers to upgrade the proposed aircraft and put fly-by-wire technology into its cockpit. This had forced it to raise its cost projections from $5bn to $7bn.

At the same time Boeing was finding it difficult to pin down launch customers for the aircraft. Although it had letters of intent from Thai Airways and Malaysian Airlines to buy about 20 jets, the prize it was looking for was a launch order from Singapore Airlines or, better still, British Airways.

BA, however, had made it clear that it had other priorities to deal with than adding a super-jumbo to its fleet. BA is concentrating instead on gaining approval for the transatlantic tie-up with American Airlines and achieving its goal of pounds 1bn in cost savings.

Despite yesterday's announcement from Boeing, aviation observers doubt that it has given up on the super-jumbo market. Indeed, there was some speculation that it may have made the announcement to sow doubts in the minds of airline customers about the need for the Airbus A3XX.

The two manufacturers have been playing a cat and mouse game over whether and when they will launch their rival programmes for the last four years. At one stage the four Airbus partners - British Aerospace, Aerospatiale of France, Daimler Benz of Germany and Spain's Casa - conducted joint studies with Boeing.

Boeing has a monopoly in the jumbo market with orders for the latest version, the 747-400, standing at 482.

About a third of its profits are reckoned to come from this one aircraft.

The 747-500X would have a payload of 450 passengers and a range of more than 8,500 miles. The 747-600X would have slightly more range but one- third more payload.

On current planning, the A3XX is due to enter service in 2003. Airbus is due to gain authorisation to begin offering the aircraft to customers late next year and formally launch the programme in 1999.