While the aviation world is waiting to see what the Boeing 737RE will be, information that has emerged publically from Boeing and information we’ve obtained gives, we think, a reasonable picture of what the airplane will look like.
This information is current as of last week. Boeing is still settling on the 737RE design and things could change, but from what has been said and on what we have pieced together, this appears to be a reasonable assessment. It appears the 737RE will largely come down to this:
In December 2009, our affiliate AirInsight in a report concluded that Boeing and Airbus would re-engine the 737 and A320. We at Leeham News this year hoped Boeing would actually roll the dice and proceed with a new airplane, being bold and reclaiming the initiative it had lost with the delays for the 787 and 747-8. Although Boeing did indeed offer the New Small Airplane to American Airlines, in the end Boeing blinked and elected the re-engine route, saying the risk was too great to market share and production to proceed.
Instead, Boeing now has a me-too airplane to the A320neo. Although Boeing claims the 737-800 is 8% more economical, all-in, than today’s A320 and a 737RE will be 8% more economical than the A320neo, none of the airlines we talked to accept these numbers.
It’s worth noting that in Boeing’s assumptions, officials only grant Airbus a 13% fuel burn savings vs the Airbus claim of 15% and they also assume continuous Boeing product improvement programs (PIPs) for the 737 vs none for the A320. It’s also worth noting that CEO McNerney cited advantages of only 2%-4% for the 737 over the A320 during the earnings call. McNerney also qualified these figures.
The end result is that Airbus and Boeing are likely to have roughly an even share of the single aisle market, adjusting for the Airbus blow-out sales lead of more than 1,300 neos. The market new entrants in China, Russia and Bombardier’s CSeries will achieve their share of the single-aisle market. So will Embraer if it proceeds with a new 130-150 seat aircraft. But clearly Airbus and Boeing will dominate, albeit with a smaller share of the pie, but still roughly equal in sales going forward.