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MDC board terminates MD-XX

McDonnell Douglas' (MDC) long-term commitment to the commercial jet-airliner business has once more been thrown into doubt following the board's decision to scrub plans for the proposed MD-XX tri-jet.

MDC chief executive Harry Stonecipher admits that the decision to abandon the programme, which was taken at a board meeting on 25 October, is part of a rethink about the group's future in the civil business.

"I don't see MDC as a major stand-alone player in commercial airlines, "he says, in a complete reversal of the bullish optimism for the civil business which he had shown when first taking over at the group two years ago. He adds that the size of investment needed to compete in the large-aircraft market would not make sense given MDC's present position.

Douglas Aircraft (DAC) reacted to the decision with dismay, as the MD-XX had recently become a major part of the company's long- term commercial airliner strategy.

DAC, along with major suppliers such as the engine makers, was genuinely surprised by the decision. "It seemed like an outstanding aircraft, but the business case just didn't make sense," says the company. Boeing is already anticipating large-scale defections amongst disillusioned DAC engineers and is expected to step up a recruitment campaign in the Long Beach area.

Swissair, which had been among the most likely airline customers for the proposed aircraft, also expressed disappointment, but admits that the decision was not a "complete surprise". Peter Gysel, head of fleet development, says that the way that the MD-XX was defined "-would have suited us very well indeed, but one order from Swissair does not create a successful programme.

"The Douglas decision sends us back to the drawing board, "adds Gysel, commenting on the carrier's Boeing 747-300 replacement study, which had pitched the MD-XX against the Airbus A340-600. "We have to do our studies again looking at everything up to and including the Boeing 747, " he says. On MDC's future in the market, he says: "We will carefully evaluate their position in two areas: support of existing products and what their position will be relative to new [aircraft] purchases."

The proposed MD-XX family would have put DAC into fierce competition with Airbus and Boeing as it was sized for the 747 replacement market, as well as for the growing long-range market in competition with later versions of the 777 and Airbus A340.

Yet dwindling orders have left MDC trailing in a weak third place in the jet-airliner market, with a share which is on course to be little over 10%. The existing MD-11 tri-jet programme, which would have been replaced by the new MD-XX family, has a backlog of only around 20 aircraft, with a significant number of those coming from the secondary freighter market. The last new customer for a passenger version was signed up four years ago.

The MDC commercial aircraft business has continued to make modest profits, but only because of severe cuts in workforce and spending, including funding for new aircraft research and development. The business, which at its height had sales of close to $7 billion, is on course for revenues of around $2.5 billion this year.

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