US rivals team up on super jumbo

Boeing reached an agreement with McDonnell Douglas yesterday to collaborate on the development of future Boeing wide-body commercial airliners, marking a highly unusual coming together of deadly rivals.

Under the pact, which will be finalised in January, McDonnell Douglas is expected to loan several hundred of its employees to Boeing to assist with the design and testing of the proposed new models. The joint teams will work initially on the development of a new super-sized Boeing 747 jumbo jet.

The deal will help Boeing get through a capacity and manpower crunch brought about by a recent inrush of new aircraft orders. McDonnell Douglas, by contrast, has suffered setbacks in its commercial jet division and will welcome a new outlet for its workforce and expertise.

"We have a record number of orders for commercial jets and several ongoing development programmes," said Ron Woodward, president of Boeing's Commercial Airplane Group. "McDonnell Douglas has excellent design and production capability, both in people and facilities, that are not being fully utilised. We look forward to applying those resources to future Boeing wide-body airplane programmes."

The agreement is likely to spur speculation about the possibility in the longer run of an eventual buy-out by Boeing of McDonnell Douglas's commercial division. McDonnell Douglas faces an uphill struggle persuading its traditional customers that it can survive as a maker of civilian aircraft. It recently shelved plans for the development of a successor to its wide- body MD-11 airliner that had been dubbed the MD-XX.

News of the collaboration deal nudged up the stock of both companies in early New York trading, with Boeing shares rising 50c to $98 and McDonnell shares gaining 75c to $53.375.