Flight Plan

By SALLY B. DONNELLY

One day after the U.S. and Europe reached a temporary agreement to avoid a trade war over aircraft subsidies, TIME's SALLY B. DONNELLY sat down with Boeing's CEO Harry Stonecipher in the 34th-floor executive conference room of the company's downtown Chicago headquarters. Despite the reprieve from a trade fight, he continued to question the launch-aid loans that Boeing's rival has historically received--and plans to continue to receive--from European governments. "Airbus is all grown up and making money," he says. "Why does it need subsidies?" Here's what else the 30-year aerospace veteran had to say about the industry, the economy and Boeing's prospects.

TIME: Isn't Boeing itself, rather than Airbus' subsidies, to blame for your company's loss of market share?

STONECIPHER: We've got great products. But we absolutely had too much success. I had a customer tell me, "Your salesman treated us like a Third World country, and we have a higher per capita income than the U.S., and I don't like that." I don't blame him. We're changing that.

TIME: Why is Airbus building the A380, by far the world's biggest plane?

STONECIPHER: Reasonable people can disagree. Airbus thinks passengers want to go through big-hub airports. Boeing thinks people want to go direct to their destination. It's also easier to build such a huge plane if somebody else--in this case, European taxpayers--is paying for one-third of it.

TIME: So, why did Airbus recently announce it would probably also build a smaller airplane to compete with the 787, Boeing's one new airplane?

STONECIPHER: At first Airbus dismissed the 787 as a copy of one of their planes. Then they said they would improve that plane. But now Airbus knows that a medium-size, efficient new airplane like the 787 is where there will be a big market. So they had to respond to us. We just want them to respond without the benefit of launch aid.

TIME: You recently received a 60-plane order from China for the 787. But only one well-known American airline, Continental, has bought the plane. Does that worry you?

STONECIPHER: I like the list of airlines that have given us deposits on the airplanes. [Not all have been publicly announced.] But established U.S. airlines don't have the money right now. Outside of Asia, the big airplane orders recently have been from airlines like Air Berlin. Those aren't established airlines. Those are start-ups. But that is the way the industry is going.

TIME: What do you think of the airline business these days?

STONECIPHER: Air travel is back nearly at record levels, but big airlines aren't making money because labor costs at legacy carriers are twice what they are at low-cost carriers. The low-fare guys are eating their lunch. The airplane business is really tough--but it's definitely not as tough as the airline business.

TIME: How do you feel about the U.S. economy and especially the trade deficit?

STONECIPHER: The economy is in good shape. And I don't understand why people are jumping up and down about the "weakness" of the dollar. It's perfect. I think it's just a problem Americans have with the word weak. We should change it to "a marketeer's dream."