Boeing

William Boeing formed the "Pacific Aero Products Co." in 1916, following the flight of one of two "B&W" seaplanes built with the assistance of George Conrad Westervelt, a U.S. Navy engineer. The company changed its name to "Boeing Airplane Company" the following year. The company sold its first plane to the government of New Zealand.

Boeing's firm trained flight instructors during the First World War and was one of the few postwar survivors from among the slew of aircraft companies that sprang up to meet the enormous needs of the U.S. and Allied armed forces. The Coolidge administration moved to assist the development of the industry by setting long-term aircraft procurement plans for the army and navy and by encouraging the growth of private carriers through the awarding of lucrative airmail contracts. Among those carriers was Boeing, who won a contract to shuttle mail between Chicago and San Francisco under the name Boeing Air Transport Co.

The new climate brought with it a spate of mergers. Boeing joined in the fun, acquiring several small carriers, and in 1928 he formed a holding company called Boeing Aircraft and Transportation Co. The following year it became part of a larger holding company, United Aircraft and Transportation, that also included various carriers, the Pratt & Whitney engine business, and other operations. Boeing, who was named chairman of this company, went on to grow quite wealthy by exchanging his stock with the holding company--a process that came under Congressional scrutiny in 1933. An irate Boeing retired from the company and sold his holdings.

The consolidation of the industry that had been promoted by Postmaster Walter Folger Brown came under attack after the Roosevelt administration took office. Senator Hugo Black led the charge, which resulted in the passage of the Air Mail Act of 1934. The law established a (short lived) ban on private transport of airmail and a more permanent requirement that aircraft producers and air transport companies be separated from one another.

This resulted in the United holding company being split into three independent firms: United Air Lines, Boeing Aircraft in the Northwest, and East Coast-based United Aircraft (renamed United Technologies in 1975), which included Pratt & Whitney and Sikorsky Aviation, a pioneer in helicopters.

The aircraft industry expanded during the 1930s, despite the Depression, thanks to the growth of the airlines. Boeing first took the lead with the development of its 247, 60 of which were ordered by United Air Lines. But then Douglas Aircraft, at the request of TWA, created the DC-1, the first of its highly successful DC (Douglas Commercial) series. Boeing, meanwhile, was one of the firms involved in producing the famous "flying boats," the huge planes commissioned by Juan Trippe of Pan American to fly across oceans and alight on water where there were no airfields.

When wartime mobilization began, Boeing began producing hundreds of B-17 Flying Fortresses for the army. A later model, the B-29, was the plane used in the dropping of the atomic bombs on Hiroshima and Nagasaki in 1945. The company also produced a series of bombers, including the renowned B-52.

After the war Boeing set out to challenge the domination of the civilian aircraft market by Douglas. The result was the Boeing 707, introduced in 1954. That plane put Boeing in an intense contest with Douglas for the loyalties of the airlines of the world. Douglas was prompted to develop the DC-8, but Boeing gained the lead in the new jet planes and solidified it with the introduction of the 727 in 1964.

The development of fan-jet engines, stimulated by the Pentagon's interest in building the huge C-5A cargo planes, made possible substantially larger commercial aircraft as well. Juan Trippe of Pan Am essentially decided to bet the company on the idea and enlisted Boeing to produce planes with 350 or more seats that would become known as the 747. The purchase agreement for 25 of the jumbo jets was signed in 1966.

The 747 eventually helped usher in a new era of mass airline travel, but the orders were slow in coming in. This put an enormous strain on Boeing's resources, coming as it did when the company was also involved in developing a supersonic transport (a project the company abandoned after Congress ending its financial support). Boeing survived the squeeze and went on to develop a new generation of planes that met the demand for aircraft that could carry up to about 250 passengers.

The market for these planes, designated as wide-body, was already being met by Lockheed with its L-1011s and the DC-10 from Douglas. A new player on the scene was Airbus Industries, a consortium formed by British, French, German, and Spanish aerospace companies. Its first product, the A300, managed to seize a fifth of the international commercial aircraft market by the end of the 1970s.

Once Boeing introduced its new narrow-body 757 and wide-body 767 in the early 1980s, the Seattle company once again took command of the market. As a result the teetering Lockheed, which in the 1970s had been rescued by a federal government bailout program, abandoned the commercial aircraft business in 1981.

This new climate was not without its drawbacks for Boeing. Having spent years and massive sums of money developing new fuel-efficient technologies, aerospace companies were now finding that the new cheapness of oil was making airlines less concerned about fuel costs. This was a particular blow for Boeing, which (along with engine-maker General Electric) was spending several billion dollars developing a new type of engine to be used on its belated entry into the 150-seat market. The project, which Boeing called the 7J7, involved an unducted fan engine, a device that made use of external fan blades that looked suspiciously like propellers but which was designed to burn one-third to two-thirds less fuel than existing engines.

Boeing decided to share the risk and the development cost of the plane with a group of Japanese companies, which were eager to gain access to U.S. aerospace technology. (Those companies have since the late 1970s been major suppliers for Boeing's 767.) Yet the slump in fuel prices and planning problems caused Boeing to delay the project indefinitely.

The Reagan administration's escalation of defense spending fattened the military side of Boeing's operations. In addition to getting more money to build its AWACS airborne command posts, the company began to get more involved in military electronics--though not as much as it hoped to when making a $5 billion bid in 1985 for Hughes Aircraft. Hughes ended up with General Motors instead.

McDonnell Douglas, the product of a 1967 merger of Douglas and the military contractor McDonnell Aircraft, found itself facing intensified competition from Boeing and Airbus in the late 1980s. For customers wanting to replace aging DC-10s with a longer-range widebody, McDonnell Douglas developed the MD-11, which fit between Boeing's 747 jumbo jets and its 200-250-seat 767. Boeing, however, responded by downsizing the 747 and stretching the 767.

During the same period Airbus--which in 1986 began to receive serious acceptance from U.S. airlines for its A320 medium-range plane--brought out a long-range A340 to compete directly with the MD-11. Able to price aggressively because of its government subsidies, Airbus began to take market share from McDonnell Douglas while making Boeing uneasy. In early 1988 Boeing strengthened its position by introducing new versions of the 747 and the medium-range 737. These received an enthusiastic response from airlines, and the company's 10-year-old midsize 757s also began to catch on. By 1989 the main challenge for Boeing was keeping up with the flood of orders.

The company was also busy developing and promoting a new long-distance, 350-seat plane called the 777. Yet the fact that the twin-engine plane would not be available at least until 1995 was causing some potential customers to turn to alternative products from McDonnell Douglas and Airbus. In October 1990, however, United Airlines showed its faith in Boeing by placing a whopping $22 billion order for 68 of the 777s--the largest aircraft order ever made. Not willing to concede defeat, Airbus began talking with airlines about building the largest planes in the world, capable of holding 600 passengers. Boeing, in turn, began to consider producing a "superjumbo" of its own.

Boeing's military business also began to surge again. In 1991 a team headed by Boeing and the Sikorsky Aircraft division of United Technologies was chosen to build a new generation of combat helicopters for the U.S. Army. The contract could eventually be worth $34 billion. Boeing was also part of a team (along with Lockheed and General Dynamics) chosen to supply 650 Advanced Tactical Fights to the U.S. Air Force--a deal that could be worth $90 billion to the three companies. The Seattle company joined yet another team (including Grumman and Lockheed) to compete for the contract on the U.S. Navy's new A-X attack plane. In 1991 Boeing formed an alliance with the Thomson-CSF subsidiary of Thomson S.A. to pursue opportunities in global military markets.

In May 2005, Boeing announced its intent to form a joint venture, United Launch Alliance with its competitor Lockheed Martin. The new venture will be the largest provider of rocket launch services to the US government. The joint venture gained regulatory approval and completed the formation on December 1, 2006.