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DOUGLAS DROPS JET PROGRAM.

Byline: Lori Dodge Rose Associated Press

McDonnell Douglas said Monday it is dropping plans to build its biggest and longest-range jetliner, but denied speculation it's signaling an exit from the commercial airline business.

Nonetheless, some analysts said the company might not be able to keep up with competitors without new long-range models.

McDonnell Douglas decided the risks of building the new plane, temporarily dubbed the MD-XX, were too high once the company looked at how much would have to be invested in the project, spokesman Larry McCracken said. Analysts have put the price tag at $2 billion to $3 billion for developing the jet and upgrading the company's facilities.

Executives and directors of the St. Louis-based company made the decision Friday, but it wasn't made public until Monday.

The MD-XX would have had 300 to 375 seats, three engines and a newly designed wing. It had been under study for about six months and was formally announced last month at the Farnborough air show in England.

Some analysts have said the MD-XX was essential to building a group of jetliners that would help Douglas Aircraft compete for lucrative international

sales with industry leaders Boeing Co. and Airbus Industrie of Europe.

``I think (this) means the company has very definitely changed its direction and is pulling in its horns in regard to the commercial aircraft market,'' said Paul Nisbet, an analyst with JSA Research in Newport, R.I.

Nisbet said that the company had received considerable interest in the MD-XX and had as many as 50 potential orders but that the risks were just too great.

``I think they're more or less signaling to the world that they're content to play a niche role rather than a primary role in the commercial airline marketplace,'' Nisbet said.

Nisbet said he expected McDonnell Douglas to continue to search for a partner or partners for its commercial business. He said it might sell the business outright if it got the right price.

McCracken rebutted speculation that the move signaled McDonnell Douglas' intentions of pulling out of the commercial aviation business.

``We are staying in the business,'' he said. ``We will continue to develop and produce and market an extensive line of commercial aircraft.''
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Title Annotation:BUSINESS
Publication:Daily News (Los Angeles, CA)
Date:Oct 29, 1996
Words:369
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