““CEOs go to their vacation homes just after companies report favorable news, and CEOs return to headquarters right before subsequent news is released. More good news is released when CEOs are back at work, and CEOs appear not to leave headquarters at all if a firm has adverse news to disclose. When CEOs are away from the office, stock prices behave quietly with sharply lower volatility. Volatility increases immediately when CEOs return to work.” —David Yermack, a New York University finance professor, whose recently released study shows a correlation between when CEOs take their private jets on vacation and movements in their companies’ stock price ”
Boeing's 787 Dreamliner
No pain, no plane.
The saga of Boeing's new widebody, mainly composite 787 Dreamliner reads like the Bible's Book of Job or Murphy's Law in hyperdrive.
The transition from building mostly metal airplanes to largely composite ones is never easy for an airframer, even an established one, and Boeing has been no exception. I won't bore you with most the 787's trials and tribulations since its launch in 2004–those have been well-documented elsewhere. The good news is that the 787 received its type certification from both the U.S. and European aviation authorities on August 26 this year.
When the smoke clears, the 787 is likely to go down as one of the great airplanes of all time. As an airliner, the 787-8 will seat 210 to 250 with a range of 7,650 to 8,200 nautical miles. In VIP configuration with 24 to 35 passengers sharing the 2,400-square-foot cabin, the 787-8 will be able to remain aloft for nearly 22 hours and fly 9,590 nautical miles nonstop, connecting virtually any two points on the globe. In the belly there is space for 4,400 cubic feet of cargo. A follow-on stretched model, the 787-9, will add 300 square feet of cabin floor space and fly 400 miles farther. This is all the airplane most ultra-billionaires and heads-of-state will ever need. And with an estimated finished price well north of $200 million, it should be.
I have been a big fan of composite airplanes–ones made of fiberglass and/or carbon fiber–since I started flying very small ones in 1994. In the not-too-distant future, I suspect, all airplanes will be built this way, since the advantages over metal construction are so numerous: there's no corrosion; they're easier to repair, lighter and stronger with better fuel economy; they can be more aerodynamically shaped; and they can be assembled faster and with far fewer fasteners. On the 787, composites gave Boeing engineers the ability to design a super-efficient wing that incorporates a somewhat disconcerting-looking aerodynamic twist and raked wingtips.
Composite aircraft have another big advantage: Because a composite fuselage needs far fewer support structures than a metal airplane, the same diameter fuselage yields much more cabin volume and passenger comfort. In business jets, you can see this on Hawker's Beechcraft's Premier 1A and Hawker 4000 models as well as on Learjet's in-development Model 85.
Composite aircraft also look cool. No rivets. No ugly, wavy sheet-metal skins. And when mated to new-generation fuel-efficient engines from General Electric and Rolls-Royce, the 787 will burn up to 20 percent less fuel than comparable metal aircraft, according to Boeing. Given the price of oil, that's huge.
Lured by this claim, the airlines have ordered more than 800 Boeing 787s worth an estimated $132 billion, making it the most successful commercial airliner launch in history. Added operational efficiency was not the only attraction. Many of these orders were from foreign national airlines in whose countries, not coincidentally, native companies received large 787 supplier contracts. Japan's All Nippon Airways has ordered 55 of the 787s and Japan Airlines another 35. Tokyo Rayon (Toray) has a contract to supply $6 billion worth of 787 carbon fiber composite. Mitsubishi is building the central wing box and Kawasaki is building some of the fuselage sections. The parts are flown to Boeing's Everett, Wash. plant in specially modified 747 freighters called "Dreamlifters."
There are numerous other examples of connect-the-supplier-to-sales-dots on the 787 with fuselage subassemblies coming from six companies worldwide. Many of them had never fashioned such large assemblies from composites before and, not surprisingly, there were quality-control problems and resulting delays. Things became so snarled that Boeing ended up buying a key supplier to straighten them out.
Playing catch-up with such a bulging order book, Boeing decided to build a second assembly line for the aircraft in Charleston, S.C., next to the plant of that key supplier, Global Aeronautica. The plan is to ramp up to 10 airplanes a month by 2013, with seven built in Seattle and three in Charleston. Boeing's Seattle-based machinists union local viewed this as taking future jobs out of its orbit and objected. In April, two months before the $750 million, 642,720-square-foot plant was due to open, the National Labor Relations Board charged that the move amounted to an unfair labor practice, placing the future of the plant in doubt and triggering vigorous debate on the issue of whether the government can tell businesses where to locate as a function of overseeing labor-relations practices.
Complications and controversies aside, passengers will notice significant interior improvements on the 787. Among them: less cabin noise from the quieter engines; larger windows; better carry-on stowage; electrochromatically controlled window darkening; sleek and sculpted ceilings and sidewalls; variable LED mood lighting; improved climate control; and an overall feeling of greater spaciousness and openness.
The cockpit is simply a work of art–ergonomically, functionally and aesthetically.
Boeing has authorized six centers to provide VIP completions for the 787. A few are literally taking the name "Dreamliner" to heart. Some designers already have fielded ambitious interior concepts for the aircraft that include a second level, giant big-screen theater room, band stand, full bar, transparent floors, fitness center, sauna, library, walk-in shower, formal dining room, gourmet kitchen and color schemes and accents that only Liberace could love. Others treat every passenger to a true first-class experience with lie-flat seating, privacy surrounds and the same connectivity and entertainment options found in a luxury hotel suite.
Boeing is sharing design data and holding workshops with the centers in the hopes of avoiding the sort of glitches that plagued the early 737-based BBJs a decade and a half ago. But because it is a mainly (80 percent) composite airplane as opposed to the metal ones they are used to, centers working on the first 787 VIP aircraft will find themselves at the beginning of a learning curve. Each 787 VIP comes with an allotment of engineering hours from Boeing to help work over the kinks. The first one is scheduled for delivery to completion centers in early 2012 and it likely will require 18 months to finish. Sixteen 787 VIPs are on order.