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"Even a subdued recovery beginning soon would constitute a truly remarkable performance for the American economy." -- Federal Reserve Board Chairman Alan Greenspan Boeing introduced a new, improved 747 jumbo jet at the Asian air show in Singapore on Feb. 26. But the improvements may be too late to save the humpbacked plane that revolutionized air travel. Look at the numbers: Boeing hasn't sold a single 747 so far this year and sold just 16 last year. Of the 61 747s on order, only 26 are passenger jets, the rest cargo. Weak sales have forced Boeing to quietly cut its production by 50%, to two jets a month.

New, quieter engines, a spiffier interior, and additional range may not be enough to counter the travel trends threatening the Queen of the Skies: The push for deregulation and more frequent nonstop flights is boosting demand for smaller planes. Meanwhile, the Airbus A-380, with 119 more seats, is giving the 747 stiff competition. And ironically, Boeing's own long-haul 777, which is 18% more cost-effective on transoceanic flights, is cannibalizing 747 sales. "If nothing else happens, I don't see very many orders for this airplane," says a senior exec for a large Asian carrier.

Cargo may be its salvation, says Joe Sutter, father of the 747. "For the next few years, freighter [orders] are going to support the 747 very strongly," says Sutter. After that, though, it'll be tough skies ahead. Mergers inevitably involve top-level casualties. And the biggest head to roll with Deutsche Bank's upcoming acquisition of Zurich Scudder Investments may be that of David Hale, one of the world's most quoted economists. Deutsche already has an array of ambitious economists, including Edward Yardeni in New York and Norbert Walter in Frankfurt, "so the last thing we need is another articulate big name," says one insider. And Zurich Financial Services, which is selling out to Deutsche Bank, hints it doesn't have a place for someone of Hale's stature now that it no longer has a big U.S. funds operation. In fact, word in Chicago is that ZSI's entire Windy City operations could be closed. But Hale says he's hopeful: "I'm in negotiations right now for a position with Deutsche; also with Zurich for a consulting position."

Hale, who already survived Zurich's 1995 acquisition of Kemper and 1997 merger with Scudder, Stevens & Clark, likely won't know his fate before April when he returns from speaking at top-level conferences in Australia and Mexico. You might say it's a case of biting the hand that fed them. In an unusual arbitration claim filed Feb. 22, two former Salomon Smith Barney stockbrokers are targeting one of their own: Salomon telecom analyst Jack Grubman. The brokers, Philip Spartis and Amy Elias, claim Grubman's "buy" ratings and bullish reports on WorldCom stock from early 1999 ($80 a share) to mid-2001 ($13 a share) led their clients--a group of former and current WorldCom employees--to lose millions. The WorldCom employees had sued Salomon and its brokers. Spartis and Elias were later dismissed.

The brokers' claim, for an unspecified amount, alleges that Grubman's ratings were "artificially positive" and generated untold investment banking profits for both Salomon and Grubman himself. The suit raises serious issues about how Wall Street operates: that Salomon failed to disclose "the inherent conflict of interest in Grubman's reporting," to the clients' detriment. Grubman acted as a de facto adviser to WorldCom's Bernard Ebbers on numerous deals and earned millions for his firm at the same time he was recommending the stock. Negative recommendations would have hurt the investment banking business. A Salomon spokeswoman replies: "We strongly disagree with suggestions that one analyst's rating could dictate an entire portfolio strategy."

While other suits against bullish analysts such as Mary Meeker have been thrown out, this latest suit shows that the anti-analyst momentum isn't over yet. The airline industry is still struggling, but many carriers are showing signs of a rebound.

ALASKA AIR

Resumed full schedule in February after having cut flights 20%. January traffic is up slightly over last year

AMERICAN

Will resume 41 canceled flights from Dallas-Fort Worth, and rehire 400 flight attendants

JET BLUE

Plans a $125 million initial public offering this spring after reporting solid profitability

SOUTHWEST

Announced plans to hire 4,000 new employees this year, including 250 pilots and 1,200 flight attendants

UNITED

Will rehire 1,200 flight attendants, restore 127 cancelled flights, and furlough 253 pilots rather than the 1,200 announced What can companies learn from Air Force and Navy fighter pilots? A lot, says James Murphy, an ex-copier salesman and Air Force F-15 pilot. Murphy, with 60 other former and reservist pilots, runs a corporate training course out of Atlanta called Afterburner Seminars. It uses Top Gun techniques to train corporate execs. Attendees have included computer CEO Michael Dell, as well as groups from Charles Schwab (SCH), Ford Motor (F), IBM (IBM), Pfizer (PFE), and Sun Microsystems (SUNW).

Business is booming in this tough corporate environment where companies want to train employees to keep on their toes in everyday work situations. Revenues are up 74% so far this year compared with a year ago and are expected to double, to $5 million, this year, says Murphy. Seminars cost about $32,000 for 150 participants.

The pilots, who travel to various corporate sites, set up a room to look like a squadron bunker. Simulations such as mock SCUD missile attacks, which have attendees diving under tables, are meant to teach participants how to react to contingencies and perform various tasks simultaneously. Then a de-briefing teaches what went wrong and how to improve next time. Attendees also gather in small groups to plan strategies like attacking an enemy's military base. "More than ever, business is combat," says Murphy. "You win if you survive, and if you lose you don't come home."

Larry Rutter, northeast sales manager for Sun Microsystems, says his 250 sales reps learned to do a better job of planning before going on sales visits and to debrief afterward to learn from their mistakes. Rutter says he learned about discipline and the importance of knowing "who your competitor is and knowing their strengths and weaknesses." In these tougher times, to the victors go the spoils. In Japan, the hot new thing for hair is ions. Negatively charged ion-emitting hair dryers, that is, which purportedly prevent split ends and other hair damage.

Japan's biggest home electronics makers, Hitachi (HIT) and Matsushita Electric (MC), can barely meet demand for the high-tech, $115 item, which was launched last year and is sold only in Japan. They are selling 40,000 a month. "We can't keep them in stock at some retailers," says a spokeswoman for Panasonic-brand maker Matsushita.

They look like normal hair dryers except they also have chargers inside or on top that emit a continuous negative charge. Ions, invisible to the naked eye, supposedly keep hair from over-drying and fraying by coating each strand. The effectiveness of negative ions has been debated for years in scientific and alternative healing communities without much hard evidence of the supposed benefits. Then again, it's hardly worth splitting hairs. Fed up with ever-dwindling job prospects, the laid-off and unemployed have been applying to grad schools in huge numbers. One indication: 133,800 people took the Law School Admissions Test, or LSAT, for 2002 entry, up 23% from 2001.

So to get an edge over fellow applicants, grad school wannabes are packing test prep classes. That's paying off for Kaplan, which charges $1,099 for its LSAT and $1,199 for GMAT courses. Kaplan won't release enrollment figures but says revenues were up 25% in 2001 over the previous year. "Business is just fantastic right now," says Albert Chen, Kaplan's Executive Director for Graduate Programs. The more pressing question: Are they hiring?


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