Boeing 787 Dreamliner - Mark Wagner [27]
Although the ATO was in the bag, and Everett chosen for the final assembly site, major questions remained about launch, and how many orders would be needed for Boeing to finally “push the button” on the program. Speaking at the celebrations that day, Mulally said, “We might have some major customers step up early and order the airplane.” Dropping hints that Boeing was considering closing the gap between the ATO and the full launch, a period of ten months for the 777, Mulally said, “We are conferring with fifty or so airlines,” adding that the go-ahead will be “sooner rather than later.”
With the formal launch coming up, a new set of program milestones was laid out for 2004. Major system selections were set for about March and April, with the engine finalists being decided at about the same time. “Most of it will be done by summer,” predicted Bair.
But even as the bunting and streamers were swept up in the convention center, news began leaking out that launch hopeful Japan Airlines (JAL) was expected to delay ordering the 7E7 until at least midyear. JAL had issued a request for proposals (RFP) in October 2003 for Airbus A300 and Boeing 767 replacements and, smelling blood, Boeing obtained special board approval to offer the 7E7 in November—well before the ATO. But to Boeing’s disappointment, JAL decided against placing any orders in December and let the offer expire.
Like so many Pacific Rim carriers, JAL had been badly hit by the impact of the SARS virus in 2003 and was prepared to be even more cautious than usual with its finances. ANA therefore became the next most likely launch candidate in Japan, but as of January 2004 had not issued any RFPs. To help jump-start sales, Boeing meanwhile opted to undercut Airbus in the midsize wide-body market with what seemed like a bargain price for the Dreamliner. Bair was first to announce the surprisingly low cost of the aircraft, which many industry observers had expected to come at a premium because of its expected 20 percent performance benefit. “We’re looking at it as a 767/A300/A310/A330 replacement, so because of that we’re talking $120 million plus or minus around $5 million—depending on the exact configuration,” said Bair in a matter-of-fact way.
In early 2004 Boeing’s surprising 7E7 pricing strategy revealed that it would be sold at prices similar to those of the 767 despite its extra capability. Although many, including Airbus, had forecast 7E7 prices akin to the A330 in the $145 million range (2003 dollars), Boeing pegged it “close” to the $125 million price of the 767-300ER. Mark Wagner
Speaking above the roar of portable air con units in a chalet at the Asian Aerospace Show in Singapore a few days later in February 2004, Randy Baseler, Boeing Commercial Airplanes vice president of marketing, confirmed that the 7E7 would be offered at catalog prices “in the ballpark” of the 767-300ER, listed then at $115.5 million to $127.5 million. In comparison, the A330-200, the closest Airbus type to the 7E7, had a list price of $142 million. Thomas Waggener, 7E7 director of marketing, said airlines were “pleasantly surprised” at the 767-comparable price tag. The pricing decision for the 7E7 was to find a “balance between whether to sell a few airplanes at a high price or a lot at a low price,” added Waggener, who said the move was part of a broader, albeit altruistic, strategy to help the airlines help themselves. Healthier airlines need more equipment, and so “we will sell more airplanes that way,” he said.
While the marketing push continued, the first major systems were announced that same month. Hamilton Sundstrand and Rockwell Collins were picked for the bulk of the power-related and avionics systems, respectively. (See chapter 5.) Systems selections would continue to make headlines until well into 2005, by when 99 percent of the