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Boeing Chief Executive Says 787 Development on Schedule

BoeingChief Executive Jim McNerney said development of the planemaker's new 787 model was on track and the company did not expect the U.S. government to cancel a $15 billion helicopter deal it had won.

"We're hitting all our benchmarks, we're fighting all the fires," McNerney told reporters on Thursday when asked about progress on the 787, adding that he expected roll-out of the plane in July.

Boeing has sent engineers to supplier firms to help them stay on schedule as the planemaker works toward a May 2008 first delivery of the all-new 787 to Japan's All Nippon Airways.

"I don't think there will be the full-blown recompete," McNerney said when asked about a U.S. Government Accountability Office (GAO) recommendation that the Air Force repeat a competition for a $15-billion search-and-rescue helicopter program it has awarded to Boeing.

"It's hard for me to put odds on it...The Air Force are the people to ask."

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Boeing is having to compete a second time for a major U.S. mid-air refueling plane deal after a scandal in 2004 led to the resignation of a top Air Force arms buyer and a Boeing executive and scuppered a $23.5-billion plan to lease and buy Boeing 767s.

McNerney said the latest bid proposals for the tanker program were due in April and that Boeing would stick with the 767 model as the basis of its offer, despite a rival bid from Northrop Grumman and Airbus parent EADSwhich is expected to offer the larger A330 airliner as a tanker.

Strong Sales

Boeing topped Airbus in new plane orders in 2006 for the first time since 2000, helped by continued strong demand for its smallest model, the single-aisle 737.

"That business (airliners) looks really strong over the next five years while our defense business is flattening out a little," McNerney said.

Despite strong sales currently, analysts expect Boeing with its 737 and Airbus with its competing A320 series to offer successors to those models some time around 2014, but McNerney said the situation remained fluid.

"We don't have a concept yet, we're having discussions with airlines more on the requirements level," he said, adding that the first task will be to assess what degree of performance improvement over current models will be needed to win backing for a new aircraft.

Asked about persistent speculation in Britain that Boeing may be poised to buy one of its large defense firms, McNerney said the UK was not the focus of any particular acquisition drive.

"Our strategy here in the UK is to grow ourselves organically," he said.

Regarding an ongoing row at the World Trade Organization between the United States and the European Union involving rival claims of unfairness about government funding for Airbus and Boeing respectively, McNerney said he believed the two sides still want to come to an agreement.

"I think everyone wants to see a negotiated settlement ...I think if you asked the U.S. side, they are ready for a discussion."

McNerney also said Boeing supported efforts by the two sides to liberalize the airline sector through an "Open Skies" pact which could lead to new routes, more competition and eventually consolidation about carriers.

"We support "Open Skies," our product strategy in many ways bets on it," he said, citing the new mid-sized, long-range 787 model aimed at allowing airlines to create more direct routes instead of relying on overcrowded hub airports in the biggest cities.

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