The Boeing 7e7 Case

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THE BOEING 7E7

We still have a lot to get done as we move toward authority to offer the 7E7 to our customers. The team is making great progress-understanding what our customer wants, developing an airplane that meets their needs, and defining a case that will demonstrate the value of the program.

-Michael

Bair, Boeing Senior Vice President'

In early 2003, Boeing announced plans to design and sell a new, "super-effrcient" jet dubbed the 787, subsequently called the "Dreamliner." However, news over the next six months depressed the market for aircrafts, which were already in sharp contraction. The United States went to war against kaq, spasms of global terrorism offered shocking headlines, and a deadly illness called SARS resulted in global travel warnings. For those and other reasons, airline profits were the worst seen in a generation. This seemed like an incredible environment in which to launch a major new airframe project. Nevertheless, on June 16, 2003, at the prestigious Paris Air Show, Michael Bair, the leader of the 7E7 project, announced that Boeing was making "excellent progress on the development of the 7E7 and continues to be on track to seek authority to offer the airplane."z ln order to proceed with the project, Bair sought a firm commitment from Boeing's board of directors in early 2004. If the board approved the plan, he could start collecting orders from airlines and expect passengers to start flying on the new jets in 2008. Between now and his recommendation to the board, he would need to complete a valuation of the 7E7 project and gain the support of Boeing's CEO, Philip Condit, and the other senior managers. Would the financial analysis show that this project would be profitable for Boeing's shareholders?

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"Bair Provides Update on Boeing 787 Drearlner," Le Bourget, l6 June 2003.
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