Boeing’s new CEO orders rethink on key jetliner project

Boeing’s new CEO Dave Calhoun. (AFP)
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Updated 23 January 2020

Boeing’s new CEO orders rethink on key jetliner project

  • Traditionally toe-to-toe with Europe’s Airbus SE, Boeing has fallen behind in sales for the largest category of single-aisle planes

LONDON: Boeing’s new CEO has sent the aerospace giant back to the drawing board on proposals for a new mid-market aircraft, effectively shelving in their current form plans worth $15 billion-$20 billion that had been overtaken by the 737 MAX crisis.

A decision on whether to launch a New Midsize Airplane (NMA) seating 220-270 passengers, which seemed imminent barely a year ago, had already been postponed as Boeing gave all its attention to the grounding of the smaller 737 MAX after two fatal crashes.

But days after taking the helm with a mandate to lift Boeing out of its 10-month-old reputational crisis, CEO Dave Calhoun said the competitive playing field had changed.

“Since the first clean sheet of paper was taken to it, things have changed a bit ... the competitive playing field is a little different,” he told journalists on Wednesday. 

“We’re going to start with a clean sheet of paper again; I’m looking forward to that,” Calhoun said.

He also spoke of a fresh approach to the market.

A Boeing spokesman said Calhoun had ordered a new study on what kind of aircraft was needed. New aircraft typically take 6-7 years or more to bring to market once a decision is made, though Boeing aims to shorten that in part through digital technology and new business models designed around the NMA.

Calhoun “has asked the team to do an assessment of the future market and what kind of airplane is needed to meet the future market,” spokesman Gordon Johndroe said.

Noting that the original assessments on the NMA were made about two and a half years ago, he said the new study would “build upon what has been learned ... in design and production.”

In further evidence of a change of pace, people familiar with the matter said a meeting between Boeing and a major potential supplier, originally scheduled for next week, had been abruptly canceled with no new date set.

That contrasts with the approach just weeks ago when Boeing was still presenting new details of the NMA to some airlines, including a working logo — “theNMA” — and details of an “advanced composite” structure, according to a slide seen by Reuters.

The NMA had been designed to address a slender gap between single-aisle workhorse jets like the 737 MAX and long-haul wide-body jets like the 787.

But most of the effort revolved around a new production system designed not only to support the NMA but to lay the groundwork for the next single-aisle aircraft after the 737 MAX.

Calhoun said he expected the MAX, whose return to service was delayed again earlier this week, to resume its previous place in the market and remain in service for a generation.

Traditionally toe-to-toe with Europe’s Airbus SE, Boeing has fallen behind in sales for the largest category of single-aisle planes, such as the 200-240-seat Airbus A321neo, which overlaps with the niche being targeted by the NMA.

By delaying a decision on the NMA, Boeing already risked losing the sweetest part of the market, especially after Airbus seized contracts with two major US airlines, analysts said.

Analysts have also questioned whether Boeing, facing costs equivalent to a new program to repair the MAX crisis, as well as delays on its large new 777X jet whose maiden flight is set for Friday, would have appetite for such a costly project now.


Saudi economy set to grow this year, driven by non-oil sector: central bank

Updated 2 min 9 sec ago

Saudi economy set to grow this year, driven by non-oil sector: central bank

  • ‘The forecasts are positive and growth is expected to be higher than last year, especially from the private sector’
  • Saudi investments in non-oil infrastructure projects will continue to support economic activity this year

RIYADH: Saudi Arabia’s economy is expected to grow this year, supported by the non-oil sector, despite a challenging global economic backdrop, the Saudi central bank governor said on Saturday as the kingdom hosts the G20 meeting.
Ahmed Al-Kholifey said it was too early to see the full picture of the economic damage caused by the new coronavirus, which has emerged in China and spread globally.
The Saudi Arabian Monetary Authority governor was speaking at an economic conference in Riyadh, where finance leaders of the world’s 20 largest economies have gathered this weekend to discuss policies and the impact of the virus on global growth.
“GDP growth in Saudi Arabia is projected to see an upturn in 2020,” said Kholifey. “Monetary, fiscal and structural policies in my country are all geared towards an expansion of the private non-oil sector GDP over the medium term,” he said.
The International Monetary Fund said in January it expects the Saudi economy to expand 1.9 percent this year, up from an estimated 0.4 percent in 2019. However, it lowered its forecast for the kingdom’s 2020 growth from 2.2 percent due to lower oil output.
“We have a positive view on the Saudi economy, the forecasts are positive and growth is expected to be higher than last year, especially from the private sector,” Kholifey said.
After a bad year for the global economy last year, with the weakest global GDP growth since the financial crisis, Kholifey said Saudi Arabia was looking for “good news” this weekend.
“At our upcoming G20 meeting, we will be looking for good news from other countries as well, which overall will hopefully confirm the baseline projection that the growth slowdown has bottomed out and a turnaround in output growth in the current year can be expected, albeit a moderate one,” he added.
But he cautioned that trade tensions, geopolitical risks, and the outbreak of the new coronavirus were downside risks to global growth.
The comments came after the Institute of International Finance warned on Friday that the virus outbreak may curb demand for oil in China and other Asian countries, depressing crude prices further, to as low as $57 a barrel, and clouding growth prospects across the Middle East.
Even as the oil-based economy suffers, economists have said Saudi investments in non-oil infrastructure projects led by the Public Investment Fund will continue to support economic activity this year. Saudi non-oil economic output grew 4.33 percent in the third quarter of 2019, even though the overall economy contracted by 0.46 percent, hit by a drop in oil production.