Boeing to expand 787 family amid strong demand

New York, Mar 28: Boeing Co. has decided to proceed with an expanded version of its hot-selling 787 Dreamliner jet, bowing to pressure from airlines, the executive who heads the 787 program said.

The composite-built 787, due to start commercial flights in 2008, helped spark a recovery in Boeing's fortunes last year, as it overtook European archrival Airbus in orders for wide-body aircraft.

Boeing had been reluctant to build a larger version of the plane, which would seat about 300 passengers in three classes, because of concern it would cannibalize sales from its older 777-200 ER jet.

But Mike Bair, general director of the 787 program, said yesterday Boeing decided to go ahead with the expanded version, which would begin flying in late 2012, because Emirates airlines, long an advocate of the larger version, was joined by others.

''As time has marched on and we talked to other carriers, it's become pretty obvious to us that the interest is more widespread than just Emirates and that's really what has caused us to look at this opportunity more seriously,'' he said yesterday in a conference call.

Boeing is talking to ''around a dozen'' airlines about the plane, which would have the same 8,600 to 8,800 mile range of a previously planned 250-seat version, he said.

Boeing shares closed down 34 cents, or 0.4 percent, at 78.43 dollar on the New York Stock Exchange, underperforming the Amex Defense index, which was up 0.2 percent.

FIERCELY COMPETITIVE

Dubai-based Emirates, which placed a 9.7 billion dollar order for Boeing's 777 jet late last year, has said it is weighing an order of some 50 mid-sized wide-body planes from either Boeing or European archrival Airbus, a joint venture of France's EADS and Britain's BAE Systems.

The airline's president told Reuters in November that Airbus was closer to meeting its requirements because it had already launched a larger-size version of its A350 -- a plane being developed to compete with the 787.

Boeing's move toward the larger plane comes amid evidence that the jet market remains fiercely competitive despite the U.S. plane maker's inroads against Airbus last year.

The Wall Street Journal reported on Monday that another Middle East-based carrier, Qatar Airways, has backed off from an earlier commitment to buy 20 Boeing 777s and is now considering the Airbus A340 instead.

Alan Mulally, chief executive of Boeing's commercial airplanes division, said Qatar Airways, previously an all-Airbus airline, had clearly preferred the 777.

''So to have them be going with or maybe looking at the A340, it's a disappointment. But it's not over yet,'' Mulally told Reuters in Miami.

Asked if business with Arab nations had been hurt by the U.S. Congress's virulent rejection of the takeover of some terminals in six U.S. ports by Dubai Ports World, he said, ''We really hope that we continue to balance the war on terror and our security in the United States.'' Still, Bair said demand remains strong for the 787, for which Boeing has received 298 firm orders, meaning its planned production through the end of 2011 is ''completely committed.'' ''We continue to be very gratified with the market response,'' he said. ''If anything it's getting even more frenetic.'' While financially troubled U.S. airlines are mostly shying away from ordering planes, the picture is more optimistic in Europe, where ''we're having conversations with a number of big carriers,'' Bair said.

REUTERS