Boeing Bets on Dreamliner

Hopes Pinned on Technology for Return to Dominance

SEATTLE -- Boeing Co. is pitching its new 7E7 commercial jet as a dream aircraft for both passengers and airlines.

Enlarged windows will offer wide views of the horizon. Improved cabin pressurization will minimize dry eyes and skin. Travelers will have more space to cram their carry-ons into the overhead bins. Boeing promises airlines that they will appreciate the innovations in design and technology that will reduce operating costs when the jet begins commercial flights in 2008.

But the real measure of the Dreamliner will be whether it can revive the sagging reputation and fortunes of the world's once-dominant airplane maker, industry analysts say.

"We went all over the planet to understand what's wrong with the travel experience," said Klaus Brauer, director of Boeing passenger satisfaction and revenue. "If you can make people more comfortable without increasing airlines' cost, it's the holy grail."

The 7E7 is Boeing's bet on the future of air travel. The aircraft, which will seat at most 289 passengers, is aimed at carriers flying point-to-point international flights. Boeing says its research indicates that mid-size aircraft with direct service will dominate the new-aircraft market in the next two decades. Its vision contrasts sharply with that of its arch rival Airbus SAS, now the leading commercial jet maker. Fueling a public sparring match, Airbus has been touting its development of the world's largest passenger jet, the 555-seat A380. The European company is betting that airlines will want enormous planes for long-haul flights to major-city hubs.

"I wish them the best of luck," said Alan R. Mulally, chief executive of Boeing's commercial airplane division. "I like our chances."

Boeing could use some luck of its own after a decade of miscues and controversy. The 7E7 is the first new plane from the company since 1990, when it launched the 777. Boeing stumbled badly in the 1990s when it spent millions of dollars developing the Sonic Cruiser and an extended 747 -- two aircraft that attracted so little customer interest that production plans were scrapped.

Airbus exploited the setbacks, moving aggressively onto Boeing's turf. The company, a unit of European Aeronautic Defence and Space Co., has piled up orders from United Airlines, Northwest Airlines, American Airlines and JetBlue Airways, last year displacing Boeing as the top commercial airplane manufacturer. Airbus is two years ahead of Boeing in developing its new super-jumbo jet, which will begin carrying passengers in 2006. It has already taken orders for 129 of the A380s, which will have a staircase connecting the two floors of passenger cabins and cocktail lounges.

To offset its languishing commercial business, Boeing has vigorously sought contracts with the military. Last year, its defense operations accounted for 54 percent of the company's sales, up from 46 percent in 2002, but the growth has not been without its own embarrassments. The company's chief financial officer was fired in November and its chief executive resigned in December in a scandal related to a Boeing deal to lease and sell refueling tankers to the Air Force. Boeing's proposal, valued at $23.5 billion, was deferred Tuesday by Defense Secretary Donald H. Rumsfeld to allow the Pentagon to assess other options.

The 7E7 stands as one of the bright spots on the Boeing horizon. Last month, the company announced its first order for 50 planes from Tokyo-based All Nippon Airways. Based on the list price, the contract was worth $6 billion, but the final price is expected to be deeply discounted. Still, the order was enough for Boeing to officially announce the launch of the 7E7, which will cost $7 billion to $10 billion to develop.