The Unraveling of Boeing | Change of Destination | 2

Hey, business wars fans, have you heard? Audible subscribers can listen to new episodes of business wars early and ad-free right now. Join Audible in the Audible app or by subscribing on Apple Podcasts. Phil Condit feels his stomach not as the consultant's presentation grinds forward. It's April 1996 and it's his first day as Boeing CEO. Boeing is the world's number one aircraft maker. Condit joined the company as an engineer 31 years ago and dedicated his life to reaching this lofty position. But his reign is kicking off with a kick in the teeth. He and 17 other top Boeing execs are in a meeting room at the company's Seattle Head Office. They've gathered to hear a team of external consultants explain how their biggest rival Airbus is undercutting them. Boeing thought little of Airbus when it launched over 25 years ago. It was the brainchild of Western European governments created as a lifeline for the old world's fading aircraft industry and funded by European taxpayers. It's not even a company, more an awkward coalition of French, German, Dutch, Spanish, and British manufacturers. But despite the shaky beginnings, Airbus beat expectations. It's now the only aircraft maker capable of challenging Boeing in commercial aviation. It owns almost 30% of the market and it's gunning for Boeing's 63% share of the market. So, Boeing's called in external consultants to dig into Airbus' recipe for success. Condit listens, as they confirmed the executive team's worst fears. Airbus is an undercutting Boeing because it lives off government subsidies. Its prices are lower because it's better at building aircraft. Airbus can make just as many planes as Boeing can, but it can do that with half the manufacturing space. Its production lines are more automated and less wasteful, too. The upshot is that Airbus' production in tooling costs are as much as 15% lower than Boeing's. And that gives Airbus a major pricing edge. After the consultants leave, Condit listens as his team debates how to respond. He's always been more of a listener than a rash decision maker. He even jokes about how his jug ears make him all the better at listening, but his team members aren't wall flowers. And one of them is certain he knows how to rise to the Airbus challenge. His name is Ron Woodard. He's the Lanky President of Boeing's Commercial Aircraft Division, and he wants a war, a price war that will take down the European threat. But the company's new offensive against Airbus is about to set Boeing on a downward trajectory that will see it go from King of the Skies to a company trapped in a tailspin, one that threatens to destroy one of America's most important manufacturers. Hi, I'm Lindsey Graham, the host of American History Tellers. In our latest series, in 1892, as millions of hopeful immigrants arrive on American shores, the United States opens a new immigration station on Ellis Island. But over time, some will find that the gates to the American Dream are shut to them. Listen to American History Tellers Unornable or wherever you get your podcasts. He lurks in shadow. He slips into dreams. He casts no reflection. Audible presents Bram Stoker's Dracula, a new full-cast audio thriller starring Jonathan Bailey as Dracula and Ella Pernell as Mina Harker. Don't miss the year's best new audio thriller. Listen to Bram Stoker's Dracula only Unornable. From Wondry, I'm David Brown, and this is Business Wars. In the last episode, aviation regulators grounded the Boeing 737 MAX after two fatal crashes, leaving the company struggling to save its finances, stock price, and reputation. But the seeds of this business disaster were sown years earlier. In this episode, we rewind to the late 1990s. To find out how an aerospace mega-merger and fierce competition from Airbus set Boeing on a new course, a course that would end in tragedy. This is episode two, Change of Destination. It's mid-1996. Several weeks have passed since the consultant's brief Boeing's executives on Airbus' price advantage. And at Boeing head office in Seattle, the company's commercial aviation president Ron Woodard is pitching a dream. He's a lanky, pushy man who relishes confrontation. His dream is to extinguish the threat from Airbus, and he wants Boeing Chief Executive Phil Condit to embrace his plan to make that dream real. On the surface, the plan is simple. Boeing will launch a full, throttled price war with Airbus. It's only major rival in civil aviation. He walks Condit through the plan. Currently, the maximum discount Boeing offers airlines is 10%. But Woodard wants to offer airlines up to 20% off, maybe even as much as 30%. Whatever it takes to beat Airbus on price in every negotiation, Condit listens without comment. He wants to hear out Woodard's plan in full, first. Woodard moves on to the second part of his plan to take down Airbus. Not only will Boeing offer airlines discounts on jetliners, but it'll deliver those planes fast. Right now, airlines place orders and then have to wait three to four years for Boeing to build, test, and deliver them. Woodard wants to slash the wait times, not by months, but by years. To do it, Boeing will have to overhaul its entire production operation. But by eliminating waste, Woodard is confident the company can boost productivity and slash costs. Those savings will pay for the price discounts to airlines and allow Boeing to deliver airplanes faster. It's a neat plan, almost too neat. And Condit knows it's easier said than done. But Woodard's a forceful man and convincing too. So, Condit approves his aggressive sale strategy. But Condit's backing the plan not only to get at Airbus, there's another factor at play too, McDonald Douglas. The St. Louis-based McDonald Douglas used to be Boeing's foremost rival, but its civilian aircraft division lost its way years ago. These days, it makes its money making F-15 fighter jets and Apache helicopters for the U.S. military. But since the Cold War ended, military budgets have been shrinking, a decline that's weakening McDonald Douglas. So, Condit wants to seize the moment to strengthen Boeing's military business by buying its old rival. But to pay for it, Boeing needs a high stock price. Something the rapid growth promised by Woodard's new sale strategy would deliver. So, with the sales push underway, Condit opens buyout talks with McDonald Douglas. It's December 1996, and Condit is ready to seal the deal on a buyout of McDonald Douglas. He's invited McDonald Douglas CEO Harry Stone cipher to Seattle for a one-to-one at Boeing sweet at the four seasons hotel. They're here to hash out acquisition terms. Condit and Stone cipher have crossed paths for years at industry events and on the golf course. But while friendly with one another, they make an odd couple. Condit is quiet and thoughtful. Stone cipher is grizzled and as abrasive as sandpaper. He's also a disciple of Jack Welch, the general electric boss who preaches that the paramount duty of any company is to enrich their shareholders, even if that means sacrificing market share. Stone cipher applied that mantra at McDonald Douglas. He focused the business on military aircraft and left its troubled commercial arm to wither. Then, he used its cash reserves and research budget to buy back a huge chunk of the company's stock. That buyback curtailed the supply of McDonald Douglas stock on the market, inflating its stock price, even as the company fell behind its peers. Then, the Pentagon dropped a bombshell. It kicked McDonald Douglas out of the race to create the joint strike fighter. And, having lost out on a slice of that $300 billion military project, McDonald Douglas is heading for collapse. But instead of coming to Seattle to beg Boeing to rescue his ailing company, Stone ciphers come with a list of demands. Condit listens, as Stone cipher lays out his non-negotiables. First, McDonald Douglas stockholders won't take a low-ball offer just because the company's in trouble. Condit doesn't object. Owning McDonald Douglas would give Boeing a bigger share of the military market and chances to do that in a rare. With strength in both military and civil aviation, Boeing will be less prone to the ups and downs of the commercial side. They agree that McDonald Douglas shareholders will get just over 13 billion dollars of Boeing stock in return for their company. Stone Cypher moves on to demand number two. McDonald Douglas will get board seats after the merger. Condit says, "Sure. He knows that'll make it easier to integrate the two companies." Next, Stone Cypher presses for a leadership role for himself. Condit agrees that he can be chief operating officer and president of Boeing. After all, Stone Cypher's 60 years old, Condit figures he won't hang around for long. Then, Stone Cypher issues the final demand. The merged company will be named Boeing McDonald. The McDonald family wants to preserve their legacy. Condit refuses. Boeing is buying McDonald Douglas. Stone Cypher lets that demand slide. The two shake hands. The merger is on, but it'll take months to get approval from shareholders and the world's government. Since Boeing is paying mainly with stock, Condit needs to ensure its stock price stays high. Because if the price declines, Boeing will have to hand over more of its shares to McDonald Douglas stockholders to reach the agreed price. But Boeing's new aggressive sales drive has that problem under control. This main rival, Airbus, is already feeling the pressure of Boeing's new strategy, discounted jetliners, delivered fast. It's 1997 in Arlington, Virginia, and in a corner office near Washington National Airport, Airbus's Jowley CEO, Jean Pearson, smiles cautiously. He's just flown in from France hoping to land one of the biggest deals in aviation history. The Airbus sales team has spent months negotiating the deal with U.S. Airways, and they told him this meeting would be mere ceremony. Just shake hands with U.S. Airways chief Stephen Wolfe, then return to France with an order for 400 planes that's worth up to 14 billion dollars. But Wolfe had other plans. When Pearson arrived at U.S. Airways headquarters this morning, Wolfe handed him a long list of last-minute asks, so he patiently worked through the list so they could reach an agreement again. Now, Pearson smiles hopefully at Wolfe. So we're good? We have a deal now, yes? Wolfe leans back into his chair and gently strokes his grey cowboy mustache. Actually no, I need more. More? Yeah. Pearson folds his arms and moves to rest them on his stomach, but misses. His doctor has put him on a strict diet that's left his belly less prominent and his suit loose and baggy. Pearson unfolds his arms and narrows his eyes instead. Stephen, I just gave you plenty. What more could you want? I want the deliveries to start six months earlier. No, Stephen. That's impossible. Impossible. Wolfe says they can deliver quicker. Saying and doing are not the same, but we could bring the delivery schedule forward two months. Three months. Fine, fine. Now, surely we have a deal, yes? Nope. I also want 5% off. 5% off of what? Off the price of everything. Aircraft, spare parts, pilot training, the works. Pearson locks eyes with Wolfe. Airbus needs this sale. Boeing's heavy discounts and promises a fast delivery are thinning out Airbus' order book, but U.S. airways has already extracted far too many concessions. Pearson considers what to do for a moment. Then he stands and reaches for his belt. He unbuckles it and allows his baggy pants to fault his ankles. Wolfe stares in shock at the Airbus' chief standing before him in his underwear. See, Stephen? I have nothing left to give, not even my dignity. Wolfe notices that his office door is wide open. The entire executive floor now has a view of his French guest standing in his office with his pants down. All right, all right. Point taken. Forget the 5%. Then a look of mischief flashes on Wolfe's face. He calls to his secretary. Bring the champagne. Pearson scrambles to Hall as pants back up his legs as Wolfe's secretary rushes in with the bottle of champagne in two glasses. Airbus has its deal, but it nearly lost it. Boeing's energetic sales blitz has left the European aircraft maker vulnerable. It's now in a weakened position. It will have to cave to airline demands just to stay in contention. In 1996, Boeing doubles the number of orders from airlines to more than 700 aircraft, more than twice as many as Airbus, but while its order book is bulging, its assembly lines are buckling under the avalanche of sales. Orders are coming in faster than the company can build aircraft, despite herculean efforts to accelerate production. Suppliers can't produce parts fast enough, causing snarlups that force Boeing to park half-finished jets on the tarmac outside its production plants. Suppliers pull triple shifts and still can't catch up, and in the rush, more and more mistakes are made. At the 737 plant in Renton, Washington, plane production gets out of sync. Plains are being painted before they are wired, forcing them to halt work and send the aircraft back to wiring. And once wired up, the plane has to go back to be painted again, mistakes that add to the delays and growing backlog. Customizers plead with their bosses to halt the production and give their teams a chance to get on top of the chaos, but every time their request gets rejected. Condit and the rest of Boeing's top brass know that halting production will expose the company's problems and alarm Wall Street. And if that panic causes its stock price to tumble, the McDonald Douglas purchase will cost even more. There's also fear the problems could cause McDonald Douglas to bail on the deal, so Boeing Senior Leadership looks the other way. Refusing to deal with the chaos on the production floor until the merger is finally signed off on by regulators, it takes until August 1, 1997 for the merger deal to complete. But it takes another two months before Boeing finally moves to fix the mass. In October 1997, after months of strain, Boeing shuts the production lines for its 737 jets for three weeks, the manufacturing meltdown forces Boeing to write off $2.6 billion. In rage stockholders file lawsuits, airlines who will now get their planes much later than promised demand millions of dollars in late delivery penalties. Boeing's reputation as a paragon of American manufacturing takes a big hit. And that stumble gives Airbus a chance to strike back. For decades, two legendary brands fought for the hearts of American bikers, Indian motorcycle and Harley Davidson. The battle looked a lot like Coke versus Pepsi or Ford versus Chevy, but tastes changed and Indian didn't adapt fast enough. The icon all but died. One came the con man, the dreamers, a string of spectacular failures that kept Indian in the grave until one company finally got it right. This is the story of an improbable revival and the re-ignition of an old rivalry. Hey, I'm David Brown, the host of the podcast Business Wars, and every season we bring you the true stories behind the companies that shape our world. Indian's new owners are going all in, but an existential crisis looms. Can Indian and Harley recruit enough younger writers to survive? Make sure to follow Business Wars wherever you get your podcasts. Audible subscribers can binge all episodes of Business Wars early and at free right now. He lurks in shadow. Audible presents Bram Stoker's Dracula, how you've never heard it before, with a new full cast audio thriller starring Jonathan Bailey as Dracula. Bella Pernell as Mina Harker and an a-list cast including Maggie Gyllenhaal as Van Helsing. Amy Lou Wood as Lucy. David Johnson as Dr. Seward and many more. When Mina's fiancé Jonathan Harker vanishes in Transylvania, Mina pieces together letters, diary entries, and chilling testimony to hunt the predator stalking those she loves. Away to discover, Dracula's already hunting her. Audible's Dracula invites you to welcome literature's most shadowy figure into your home. Listen to the new audiobook adaptation of Bram Stoker's Dracula, only on Audible. It's January 1998 and in Palm Springs, California, Boeing's managers are attending their annual retreat and despite the warm sun overhead, a cloud hangs over the event. It's the first retreat since the company merged with McDonald Douglas, but instead of celebration, reeling from a production crisis and a loss of nearly one $180 million. The first loss since 1959. Then there are the new working styles imported from McDonald Douglas. Managers thought Boeing was buying McDonald Douglas, but insiders now have joke about how McDonald Douglas bought Boeing with Boeing's money. And the man who most embodies the wind of change at Boeing is the man now on stage, the company's new president, Harry Stonecyver. He's already imposed a new policy called the 515 rule. It states that all memos must take less than five minutes to read and 15 minutes to write. He's also brought with him a gang of McDonald Douglas executives who, like him, want Boeing to prioritize shareholder returns. Stonecyver eyes the hundreds of Boeing executives crammed into the hotel's vast conference hall. Then he asks the managers in charge of commercial aircraft production to stand. Around 200 people stand up. Stonecyver leaves them hanging for a moment. Then tells them they need to apologize to the entire company for missing their financial goals. After the humiliated managers sit back down, Stonecyver warns the room that Boeing's sole thread is from within. The failure to execute is the number one enemy, not Airbus. In summer 1998, Stonecyver gets content to publicly and suddenly fire Ron Woodard, the mastermind behind Boeing's discount driven sales push. Two days later, several of Woodard's top reports also get fired. Next, Boeing's financial chief is fired, allowing Stonecyver to step in as acting chief finance officer. Stonecyver uses the position to accelerate his push to convert Boeing from a great engineering company into a great business. Central to that plan is convincing Wall Street that Boeing is a great investment. So Stonecyver focuses on "Rona," the return on net assets. That's a measure of how efficiently a company uses its assets and the higher it is, the better. So Stonecyver moves to push Boeing's "Rona Score" up. He starts selling Boeing plans, spinning them out to create an ecosystem of small suppliers that depend on orders from Boeing. And the advantage of these small suppliers is that they can be squeezed on price. Old-school Boeing managers warn this will put quality at risk. Stonecyver rejects that idea. For him and Boeing's new regime, maximizing shareholder returns is prized above all else. Stonecyver believes businesses exist to make money for their owners and, if tradition, employees and innovation get in the way of achieving that, then those are barriers to success that need to be dismantled. But while Boeing is putting innovation on the back burner, Airbus sees it as an opportunity. It's May 2000, and in Singapore Airlines headquarters, a 79-year-old man in a short sleeve shirt is causing a commotion. The airline's executives gasp as the hunched retiree strolls down the 6th floor corridor towards the boardroom. One nervous employee approaches Timothy as a teenager asking a celebrity for an autograph and asks if he may shake the man's hand. The elderly American looks surprised, but obliges. The thrilled employee grins as they shake hands. He can't believe it. He's actually shaking hands with Joe Sutter, the Boeing engineer who built the 747 jumbo jet, the biggest passenger jet ever made. Sutter's an industry legend, a straight-talking old-school engineer, and Boeing sent him here to convince Singapore Airlines to snub Airbus' latest project, the A380. Airbus calls it "the super jumbo," and is designed to make the 747 extinct. The 747 is a thorn in Airbus' side. It's a huge moneymaker for Boeing, but Airbus has no equivalent jet to offer airlines, so Boeing has no need to discount 747s to win sales. If an airline needs a jumbo, it has to buy from Boeing. And the profits from the 747 allow Boeing to reduce margins on its other jets, helping it to undercut Airbus on price. So, Airbus is going on the attack, but not head on. Instead, it's going to try and split the jumbo market. It's already using its wide-bodied A340 jet to appeal to airlines that need plenty of seats, but doubt they can fill a 747. Now, it's building a super jumbo A380 to peel away the customers who wish their 747 had more room. And that strategy's got Boeing spooked. If Airbus' plan works, the 747 will lose sales in both directions, and its profits will crumble. So while Airbus continues trying to build its super jumbo, Boeing's trying to convince airlines to steer clear of it. Sutter takes a seat in the boardroom, and as the excited Singapore Airlines executives listen, he starts picking holes in Airbus' A380 project. He questions how Airbus is going to build a heavy jumbo jet with two stories and more than 500 seats, but also make good on its claim that it'll be cheaper to fly per passenger than a 747. It just doesn't add up. He urges them to hold off on making a decision about whether to buy any A380s until they've seen Boeing's plan for a stretched 747-400. The executives seem to lap it up, but really they're just thrilled to hang out with Sutter, and they're not excited at all about buying a longer 747. In fact, it just underlines why they and other airlines are turning to Airbus. For while Airbus is bringing new jets to market, Boeing's playing it safe. Boeing used to be the trendsetter, but these days, it's an aircraft manufacturer that seems terrified of spending the billions of dollars needed to bring a truly new jet to the market. And that's about to come back to bite them. It's June 2000, and Airbus is holding a news conference at a hotel in Paris, France. As aviation journalists take notes, Airbus' skinny CEO Noah Forjard delivers the news with a huge smile on his face. Airbus is now the market leader. In 1999, it sold 85 more planes than Boeing. The days when America alone ruled civilian aviation are over. Then Forjard delivers another announcement. Airbus is going to become a real company. The French German and Spanish manufacturers behind it are merging to create a new company called EADS, the European Aeronautic Defense and Space Company. Airbus will be a subsidiary of EADS with its own factories and accounts. The cumbersome bureaucracy that used to slow Airbus down will now be gone. Then Forjard delivers his third good news story of the day. Europe's governments have agreed to help fund the development of the A380 Super Jumbo with low-interest loans. The journalists are skeptical. The rise of low-cost airlines has led to more people flying direct to their destinations rather than to large hub airports. Many doubt there's a need anywhere for a plane capable of seating 900 people. Forjard dismisses the objections. Airbus estimates that demand for air travel will triple in the next 20 years. The A380 will allow airlines to meet that demand without having to put on extra flights. But Boeing agrees with the skeptical journalists. It thinks the trend is away from hub airports. Low-cost airlines prefer flying to their end destinations rather than going through expensive hub airports. Passengers who can afford it prefer to fly direct and avoid the risk of lost luggage and missed connections. Instead, Boeing thinks the future is in mid-sized planes that are more fuel-efficient than jumbo jets, which only become economical when filled close to capacity. The way Boeing season, what the market really wants, are fuel-efficient mid-sized planes that can fly long-range. The trouble is, the company is far from sure it wants to bet on that prediction with cold hard cash. It's late 2002, and in Boeing's new high-rise headquarters in Chicago, CEO Phil Contet is updating the board on the Sonic cruiser. Boeing's been touting this futuristic aircraft for nearly two years. It's designed to travel just below the speed of sound, and that's fast enough to shave three hours off trans-Pacific flight times. But while Boeing thinks it's the plane of tomorrow, airlines don't agree. Contet nudges as spectacle's up his nose and runs through the feedback. Airlines prefer reduced consumption to increase speed. They don't think passengers will pay a premium to travel faster. They also worry that the Sonic cruiser won't plug into route networks built around the speed of conventional jets. They're more interested in the 77 than the Sonic cruiser. The irony isn't lost on the board. The 77's not even a serious proposal. It's just a bunch of theoretical figures created to show airlines what it would look like if you applied the Sonic cruiser's lightweight composite structure to a standard jet. But now, like an opening band-up staging the main act, the super-efficient 77 is becoming the star of the show. Stone Cypher, now vice chairman of the company, leans forward in his chair. So, what do we do? Dump the sonic cruiser and go with a 77? Well, airlines seem keen on the 77, so maybe we could explore that instead of the sonic cruiser. But there's no rush. It's still safer to develop new derivatives of our existing products. Ward member James McNurney interrupts. He's not keen on contents play its safe approach. It felt we haven't approved the development of a new aircraft for 13 years. If we dither much longer, we'll lose our chance to leapfrog airbus. Stone cipher cuts in straight away. Spending billions on a new aircraft design doesn't sit well with his quest to deliver shareholder value. Bringing the 77 to market will cost 10 billion dollars. That's way too much. I won't back anything that expensive. Airbus doesn't have to worry about repaying the governments that fund its new products, but we have to answer to our lenders. It's a sheer hairy, but we can't sit on our hands forever. The 757 and 767 are in their twilight years. If we vacate the mid-size aircraft space, airbus will fill it. We should forget the sonic cruiser and focus on the 77. That's what airlines want. The board backs the plan to design the 77. Over the next few months, the 77 takes form. Engineers design a super-efficient mid-size twin jet that will be built from the same lightweight composite materials the sonic cruiser was going to use. Boeing's finance teams identify outsourcing is the best way to mitigate against the financial risk of bringing a new aircraft to market. So it commissions hundreds of suppliers across the world to create the parts and systems that will eventually be assembled at Boeing plans. And as the project gathers momentum, the company gives the 77 a new name, the 787 Dreamliner. More content can make a call on whether to put the Dreamliner into production. Boeing finds itself accused of bribery, and that's going to play right into Stone Cypher's hands. You stepped out for your morning jog, except it's not your usual morning jog. You started listening to an epic sci-fi book Unaudible. 30 chapters later, you've accidentally run a half marathon. You lost track of how far you've run, somewhere just past the city limits. You can't stop. You have to find out what happens next. Then it's over. The universe seems bigger. You feel different. You feel like you have no idea where you are. Audible. Stories that speak to you. On January 1st, 1892, a young Irish immigrant named Annie Moore became the first person processed at the new immigration station on Ellis Island. For the millions who followed her, this small island in New York Harbor would become the place where their American dream would either begin or end. Hi, I'm Lindsey Graham, the host of the podcast American History Tellers. We take you to the events, times, and people that shaped America and Americans. Our values, our struggles, and our dreams. In our latest series, we trace the history of Ellis Island. For more than three decades, it served as the gateway through which millions of hopeful immigrants entered the United States. But as the nation struggled to decide who belonged, some would find the gate shut to them. Follow American History Tellers wherever you get your podcasts. Audible subscribers can binge all episodes of American History Tellers early and ad-free right now. It's December 2003. And on the 36th floor, Boeing's headquarters in Chicago, its Harry Stone ciphers first day as CEO. And he's inherited a mess. He sits in his office getting ready for his first board meeting as the boss while trying to ignore the pings of emails arriving in his inbox. He knows what's on those emails. More updates on the scandal that shaking Boeing to its core. The scandal made headlines two months ago after it was revealed that Boeing's finance chief helped the company win a $23 billion military contract by offering a Pentagon official a high-pay job. Now, senators are out for blood. The Justice Department is considering criminal charges, and the Pentagon is threatening to shut Boeing out of military contracts worth billions, based with the intense fury from DC. Condit resigned as CEO. Now, its Stone ciphers job to put out the fire that's threatening to burn the company to the ground. A 50-something woman with short brown hair enters the office. She's Bonnie Sudik, Boeing's head of internal governance. Stone cipher glances up at her. Be careful, Bonnie. It's raining shit in here. Sudik smiles awkwardly. OK. What do you need? I need a coat of conduct, one that applies to every single employee. I need it to be strict, real strict, zero tolerance of any misdemeanors. We have to be pure as the driven snow now. You got it? Absolutely. I can have it ready in four months. Maybe you didn't understand me, Bonnie. You're looking at your calendar. I'm looking at my watch. You've got one month. Order is issued. Stone cipher grabs his notes for the board meeting and races out the door and into the boardroom. And he doesn't waste time there either. After explaining his plan to introduce a new code of conduct, he shifts his focus to what he hopes to do as CEO of Boeing, and his top priority is Airbus. I want to go after Airbus and hard. First, we bring the 787 Dreamliner to market. Airbus is busy with its superjumbo, so if we do that now, we can grab the mid-size market before they can respond. But directors break into smiles, putting Boeing's first new jetliner since 1989 into production will be a welcome respite from the current onslaught of bad news, and one that could help Boeing turn the tide and pull ahead of Airbus once again. And while Boeing gets to work in turning the 787 Dreamliner from a paper plane to a real jet, Airbus is ambitious superjumbo. The project runs into trouble. After years of work, the company discovers a small yet major problem in the design for the A380. Each of its superjumbo contains more than 300 miles of electrical cables. But when Airbus's teams in to lose France attempt to wire up the first A380s, they discover an unexpected problem. The wires are too short by a few centimeters, and that means they can't make the vital final connection. In spring 2006, armed with this news, the head production manager travels to Paris to explain the situation to Noelle Forjard, co-CEO of EADS, Airbus' parent company. He explains how the error was caused by the A380s German team using an older version of the design software than their counterparts in France. Forjard takes the news badly. The A380 is a $13 billion project that's already behind schedule and over budget. Now, a few missing centimeters of wire are going to delay the planes another six months and cost Airbus billions. He asks why they can't just add some more wire to extend the connection. The production chief explains that would increase the electrical resistance of the wires and reduce power throughout the aircraft. The only solution is to tear the wires out of every A380 in production and start over. Forjard puts his head in his hands. He knows this delay will finish him. In June 2006, Airbus announces a six month delay to the delivery of the first A380s. It informs investors that this will cost the company two billion euros over four years and watches its stock price fall 26%. A few weeks later, Forjard's out of a job. But as the six month delay turns into a year, customers grow frustrated. Fines and cargo carriers start canceling orders and demanding late delivery payments. Airbus sends hundreds of German workers to its plant and to loose to try and get production back on track. But the A380 just slips further and further behind schedule. And while Airbus struggles with its super jumbo, Boeing is gathering speed. On July 2007, Boeing invites 15,000 aviation fans to Everett Washington to witness the unveiling of the 787 Dreamliner. The thrilled crowd watches as the massive doors of the Dreamliner's assembly plant roll back to reveal a blue, white and silver jet adorned with a Boeing logo. They clap and cheer. It's the first proper new Boeing passenger jet in over a decade and they hope it's going to revitalize America's top plane maker. It's yet to fly, but the Dreamliner is an aviation sensation. It's already the fastest selling plane Boeing's ever made. Airlines love its fuel efficiency, high-tech features, and passenger pleasing tall windows. Boeing has 700 orders and a six year waiting list. But when the aviation fanatics get the chance to see the Dreamliner up close, they're shocked. In the fuselage, they notice there are temporary fasteners and holes. It's soon dawns on them that this isn't a finished airplane. What Boeing's actually showing them is about as airworthy as a toy model plane. It's held together with make-do parts and fake surfaces, and there's a reason for that. Boeing has outsourced much of the production of the Dreamliner to its global network of external suppliers, but these suppliers are struggling to get up to speed on the aircraft's advanced tech and composite materials. They're behind on making everything from the Dreamliner's computer software to foraging the titanium fasteners that hold the plane together. But at Boeing headquarters in Chicago, no one's fretting. They believe these are just teething problems, and they've got time to fix them. Airbus's answer to the Dreamliner, the A350, is still years away from production, and the troubles with the A380 are a major distraction for its European nemesis. Boeing is getting overconfident, because Airbus is about to spark panic by taking aim at Boeing's best seller, the 737. On the next episode, Airbus wows airlines with the A320neo Boeing hurries to update the 737 and disaster strikes in Indonesia. From wondering, this is episode two of the Unraveling of Boeing for Business Wars. If you're interested in hearing more about Boeing, we recommend Boeing vs Airbus by John Newhouse and Flying Blind by Peter Robinson. A quick note about the recreations you've been hearing in most cases we can't know exactly what was said, those scenes or dramatizations, but they're based on historical research. I'm your host David Brown, written and produced by Tristan Donovan of Yellowand, researched by Marina Watson, sound designed by Joe Richardson, fact-checking by Gabriel Drowlay, voice acting by Chloe Elmore. Our managing producer is Desi Blalock, our senior managing producer is Colin Pluse. Our producers are Tristan Donovan and Grant Rudder. Our senior producers are Emily Frost and Dave Schilling. Our executive producers are Jenny Lauer Beckman and Marshall Lewey for Wundery. Decided to dive bar kitchen in upstate New York, the owner cracks open a box and discovers her chicken order misdelivered, all she has to work with are wings. So with a little culinary genius and a dash of luck, the Buffalo Wing is born. Well, so the story goes, that game day staple has humble origins, but its popularity gave rise to two empires, Buffalo Wild Wings and Wing Stop. Hey, I'm David Brown, the host of the podcast Business Wars. Every season we bring you the true stories behind the companies that shape our world, their rivalries, their reinventions, and their spectacular rises and falls. Buffalo Wild Wings built a sports bar empire, Wing Stop went the opposite direction, focusing on getting wings out the door. For years, Buffalo Wild Wings was the undisputed king, but when Americans started ordering in instead of going out, Wing Stop was ready to tear down its rival. Audible subscribers can binge all episodes of Business Wars early and ad-free right now, an audible in the audible app or by subscribing on Apple Podcasts.