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"We are excited to continue our partnership with the state of Washington and the city of Everett on the 7E7," said 7E7 Senior Vice President Mike Bair in a news release.

The company's board of directors also has given the Commercial Airplanes unit clearance to begin offering the new Dreamliner passenger jet to airlines.

Boeing Workers Cheer 7E7 Announcement

Responses will determine whether the project goes forward, but the decision is an important landmark for Boeing, which has been overtaken by Airbus in the airplane-manufacturing business it had long ruled.

The company's new CEO, Harry Stonecipher, said he's optimistic about the 7E7's prospects.

"We are 10 for 10 in bringing successful planes to market," he told a crowd of thousands of Boeing workers gathered at a downtown convention center.

"Now it's time to move forward and add a new member to the Boeing family," said Alan Mulally, CEO of the Commercial Airplanes Division.

"Boeing will continue to lead commercial aviation for decades to come, no doubt about it," he said.

The decision was praised by the state's elected officials.

"What a truly great day for Everett, for our state and for the best aerospace manufacturing workers in the world," said U.S. Rep. Rick Larsen, D-Wash., whose district includes Everett, 30 miles north of Seattle.

"The first Boeing plane was built in Washington and it's only fitting that the next generation of planes will be made here too," said Sen. Maria Cantwell, D-Wash.

"One hundred years ago this week, the Wright brothers launched the Age of Flight," noted Sen. Patty Murray, D-Wash. "Today we proved that Washington has the Right Stuff to lead the next century of aviation."

The news also brought congratulations from Boeing's chief rival, the European consortium Airbus.

"We congratulate them on their authorization to offer and we wish them the best of luck," Airbus Commercial Director John Leahy said in France.

Washington, where Boeing was founded in 1916, was one of 14 states invited to submit bids for the project. The company's wide-body plant in Everett was selected over three other finalists: Kinston, N.C.; Charleston, S.C.; and Mobile, Ala.

Gov. Gary Locke and the Legislature were determined to win the project, especially since being stunned two years ago by Boeing's decision to move its headquarters to Chicago.

This summer, they agreed to grant the aerospace industry tax breaks totaling $400 million through 2009 -- and potentially worth $3.2 billion over 20 years -- if Boeing built the 7E7 here.

Aerospace analyst Paul Nisbet of JSA Research said the decision was widely expected.

"Certainly there is a very skilled work force and a lot of people to choose from," he said. "They are getting one whale of a tax break, it sounds like."

Designing a more efficient airplane will energize the work force, said analyst Richard Turgeon of Victory Capital Management. He said a plane the size of the 7E7 is in demand as well.

"This is what they needed to do for a very long time," he said.

"It's a good thing for the company all around," Turgeon said. "Morale is going to move up."

Outside the region, it makes little difference where the plane is built, he added: "What matters is that they deliver an airplane on time and on budget, in terms of projections."

Boeing's board met in Chicago earlier this week to make the final decision on where to build the plane, which would be Boeing's first new jet since the 777 program was introduced in 1990.

Using more composite materials than metal, the plane would weigh less and use 20 percent less fuel than other models. It also would have bigger windows and slightly wider aisles and seats than other planes. Boeing would sell the jet as a replacement for the 757 and 767, with greater range to handle long-distance routes.

The jet program still wouldn't be formally launched until mid-2004, after Boeing gets a read on airline interest, and the 7E7 wouldn't enter the market before 2008.

In recent years, Boeing shelved plans to build a 747X jumbo jet and Sonic Cruiser. Analysts have said that if Boeing does the same with the 7E7, it will lose its remaining credibility in the commercial jet market.

Boeing has been battered by bad news since its move to Chicago in 2001, from the post-Sept. 11, 2001, drop-off in commercial aviation to a series of defense-contracting scandals to the recent departures of chief financial officer Mike Sears, who was fired, and CEO Phil Condit, who resigned.

Since 1997, Boeing's employment rolls have been cut in half, with about 55,000 currently employed in Washington.

Boeing stock closed at $39.93 per share on Tuesday, up 73 cents, or 1.86 percent.

Previous Stories: October 30, 2003: Washington Still A Contender For 7E7 October 15, 2003: Report: Only The 7E7 Tail To Be Built Here October 6, 2003: Duluth Bows Out Of 7E7 Fight September 29, 2003: No Decision Yet On 7E7 Future June 19, 2003: Boeing 7E7 Bids Due Friday June 9, 2003: Hunger Strike Protests Proposed Boeing 7E7 Tax Breaks June 6, 2003: Locke Urges Huge Tax Cuts To Win 7E7 June 5, 2003: State Snubbing Renton In Campaign For 7E7, Mayor Says June 4, 2003: Locke Launches Campaign For 7E7 May 30, 2003: State Boosts Efforts To Land 7E7 Production May 16, 2003: Locke: Washington 'Simply The Best' Home For 7E7 Plant May 14, 2003: Thousands Vote On Boeing 7E7's Name May 1, 2003: 7E7 Decision Could Determine Boeing's Long-Term Plans