Douglas may build commercial version of big C-17 cargo plane.

How Cargo Aircraft Compare

Aircraft
Specifications      C-17 (MD-17)       MD-11         747

Cargo
Capacity (lbs)        170,400         200,000      243,900

Length (feet)           159             201          232

Wing Span
(feet)                  170             170          211

Range (miles)          2,640           4,500        4,136

LONG BEACH - The once-troubled C-17 could be taking a new flight path.

Douglas Aircraft Co., maker of the giant military cargo aircraft, is considering developing a commercial version of the plane. A decision on whether to go forward is expected by the board of parent McDonnell Douglas Corp. before the end of the year.

Backers say a commercial version of the aircraft would fill a growing niche for a cargo plane capable of carrying large items and landing in less-than-ideal facilities.

Opponents question whether Douglas can make the costly C-17 an economically viable product for commercial users. At present, the aircraft does not have to compete in the marketplace because its only customer is the U.S. Air Force.

Douglas has a contract to build 120 C-17s for the Air Force, at $173 million each. Industry experts said last week that Douglas would have to bring the price down by at least $10 million to make it attractive to commercial users.

The commercial version of the cargo plane would be called the MD-17, and targeted buyers would include most major passenger airlines that have cargo operations, as well as companies like United Parcel Service and Federal Express.

"What would be unique about it is its roll-on capacity that allows for the shipment of big items like road-grading equipment and oil derricks," said Douglas spokesman George Sillia. "It has the capability to land and take off on short and less-than-fully-developed runways, and to turn around on short taxiways. All of the current cargo planes can't do those things."

Analysts agreed that the MD-17 could have capabilities not found in existing commercial cargo planes, though some expressed doubts that Douglas could offer the plane at a price low enough to attract buyers.

"The big question is the price," said Jon Kutler, president of Quarterdeck Investment Partners in Century City. "They're going to have to make it inexpensive enough for commercial users to not only buy it, but operate it."

Kutler said the operational costs could be significant because owners would have to learn how to operate and maintain a new aircraft. All of the existing cargo aircraft are freighter versions of passenger planes that have been available in the commercial market for years.

"Any buyer of the MD-17 would also have to buy and stock specific spare parts and have people who are specially trained to service the plane," said Kutler.

Another analyst, Peter Aseritis of CS First Boston in New York, said the proposal is more of a marketing ploy than a new aircraft-production program. It involves merely repositioning the C-17, and marketing it to a new set of potential customers.

"What they're saying is, 'If we can sell two or three more of these a year without any real significant additional costs, why not?'" said Aseritis.

If Douglas could produce another two or three C-17s a year, and sell them as MD-17s, its per-plane production costs would probably come down due to the increased volume - an additional incentive for Douglas.

The C-17, a four-engine jet aircraft, can carry up to 170,400 pounds of cargo, far less than the 243,900-pound capacity of a Boeing Co.-made 747. Douglas' current jumbo cargo aircraft is its freighter version of the MD-11, which can carry as much as 200,000 pounds.

Though an MD-17 would carry less weight than either the 747 or MD-11, its primary selling point would be its ramp door and low-to-the-ground body, which would allow big equipment to be driven into the plane's cargo hold.

The military division of Douglas Aircraft delivered its first C-17 to the Air Force in June 1993. At one point, because of cost overruns and delays, the program was almost canceled by the Pentagon. But those problems were corrected, and earlier this year, the Pentagon ordered another 80 C-17s on top of its original order for 40. That put the total value of the 120-plane program at $14.2 billion.

About 8,400 people work on the C-17 program in Long Beach. Sillia, the Douglas spokesman, said the number of new jobs created by the MD-17 project would depend on the number of planes ordered and the delivery dates.

He said that, if only a few MD-17s were ordered and the delivery dates were spread out far into the future, Douglas could build those additional planes with its existing work force.

If the McDonnell Douglas board approves the MD-17 project, the company would immediately start formal marketing to potential buyers. Sillia said the company hopes for between 15 and 25 initial orders within the first six months, with actual delivery dates to be negotiated separately with each buyer.

If Douglas proceeds with the MD-17, it would not stop making the cargo version of the MD-11, a three-engine jumbo jet. "We think an MD-17 and MD-11 would complement each other. The MD-17 could do things the MD-11 can't. Having both would give a cargo carrier everything they need in aircraft," said Don Hansen, a spokesman for the commercial side of Douglas Aircraft.

According to Douglas studies, the worldwide air cargo market will expand at an estimated rate of about 7 percent a year for the next 20 years.