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Boeing pushes Net strategy
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June 11, 2001: 7:21 a.m. ET
Aircraft maker to sign biggest airlines to on-board Web access program
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NEW YORK (CNNfn) - Boeing Co. is expected to sign up the three biggest U.S. airlines to install onboard systems that provide e-mail and Internet access for passengers, a published report said Monday.
UAL Corp's (UAL: Research, Estimates) United Airlines, AMR Corp.'s (AMR: Research, Estimates) American Airlines and Delta Air Lines Inc. (DAL: Research, Estimates) could sign agreements with Boeing as early as this week to begin in-service testing of the new services, the Wall Street Journal said, citing industry officials.
The move signals a strategic and marketing coup for the world's largest aircraft maker, whose program to equip jetliners with Internet gear has fallen far behind schedule a year after its launch.
Boeing's (BA: Research, Estimates) agreements could make it dominant in a market some experts expect to explode. The system, dubbed Connexion by Boeing, will link aircraft with satellites via special antennas capable of handling vast amounts of data. Passengers then could send and receive e-mail and surf the Internet from onboard laptops and personal digital assistants, the report said, though it did not mention current restrictions preventing passengers from using personal computers aboard aircraft.
The service, which could cost users $15 to $25 an hour, is expected to produce as much as $5 billion in annual revenue for Boeing by the end of the decade, the paper said.
Boeing has invested $200 million in the program over seven years in a major effort to boost its business but faces big risks in bringing it to market, the report said, noting several other companies have abandoned efforts to bring Internet use to aircraft.
Boeing expects to spend about $500,000 to retrofit each plane while carriers likely will pay an upfront connection fee and share in the revenue stream, the report said.
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Meanwhile, Airbus Industrie, the European aircraft maker that is Boeing's main rival, is expected to become a major player in the field, in part by buying a stake in Tenzing Communications Inc., a closely held Seattle company that competes with Boeing in this field, the newspaper said.
Boeing shares ended down $1.06 at $64.59 Friday. 
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