Re: Boeing in the WSJ

From:         "Robert J. Gordon" <rjg@nwu.edu>
Date:         28 Sep 95 03:52:47 
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> The "Heard on the Street" column in the Oct. 27 WSJ (p. C2) has an
> article on Boeing, debating whether or not Boeing's current stock
> price is too high.  Various interesting views.  The part I found
> most interesting was a comment that the 777 will make more money
> for Boeing in real dollars than the 747 -- a pretty remarkable
> notion considering the 747 has been the most profitable airliner
> program ever, and unlike the 777 has been without a direct compet-
> itor for its entire life.

I read the column too.  The comment on 777 program profitability
is sheer speculation.  I could make the case this way.  777 could
be more profitable **if**:

(1)  There will be no further 747 derivatives, and no 600-seater.

(2)  There will be a big family of 777 derivatives that will soon make the
747 obsolete.

(3)  The 747 program has been going now for 26 years.  The 777 program will
go for 50 years.

(4)  "We've gone about as fur as we can go" on engine technology, so new
777-replacement aircraft are many decades away, not just one decade or so.

(5)  The MD-11 will eventually cease production, and the 777 will wipe
330/340 off the map.

--
Robert J. Gordon, Chair and Stanley G. Harris Professor
Department of Economics, Northwestern University
Evanston IL 60208-2600
rjg@nwu.edu