Boeing to build 737 into 2020s: Bair

The Renton (WA) Reporter has this story that Boeing will continue to build the 737 into the 2020 decade, further extending the timeline for a replacement aircraft, says Mike Bair, vice president of Business Strategy and Marketing for the company.

This is highly significant on a number of levels. First, it tends to match the timeline Airbus has already foretold about a replacement for the A320 about 2024. Neither company can really afford to undertake yet another new airplane program, given the cost overruns and customer penalties for their respective A380, A400M, 787 and 747-8 programs. Airbus is also engaged in R&D for the A350, with a price tag of roughly $15bn. With engineering and production resources stretched already, there simply are limitations for Airbus on taking on an entirely new development program.

For Boeing, the situation is compounded. The company also faces what to do about meeting the A350 threat to its successful 777 line. Although Boeing is looking at major derivative upgrades to the airplane, it is also necessary to consider an entirely new aircraft. The last thing Boeing needs is a requirement to develop a successor to the 737 on top of this-especially when decisions have to be made in what will now be the early years of the 787 entry-into-service.

Bair’s revelation that Boeing now looks to the 2020 decade for a replacement 737 also signals, at least to us, the increasing likelihood that Boeing will re-engine the 737 for greater fuel efficiency circa 2015, meeting a requirement sought by Southwest Airlines and other customers. Southwest is Boeing’s largest 737 customer, ordering more of this type since it was formed in 1971 than any other airline or lessor.

Airbus plans to decide by the end of next year whether to re-engine the A320 family. Boeing will certainly match any plan to do so to keep the 737 competitive.

Moving replacement airplanes out to 2024 gives both companies the 7-8 years or more needed to recover R&D costs for a re-engined airplane. Boeing CEO Jim McNerney said a few months ago that a derivative 737 would cost 20%-40% that of a new airplane and that the business case for a re-engined model is better than originally thought.

10 Comments on “Boeing to build 737 into 2020s: Bair

  1. Hi Scott,

    could I get your thoughts on the following:

    -GTF? I keep hearing that Boeing would have to redesign their landing gear if they were to introduce this engine to the 737 (assuming it is the game changer it is touted to be, which seems far from certain, from what I read). Wiould this landing gear redesign be part of the 20-40% development cost?
    -winglets on the A320? Airbus seems to be ready to introduce this and it would seem to be logical to introduce this at the same time as a new engine. Do you think this makes sense? Would it make a significant difference?
    -smaller 787 competitor gap? As you yourself have pointed out, the A350 is a competitor for the larger 787 models and the 777. They still have not come up with a competitor for the smaller 787. Could it be that Airbus is hoping that the 787 does not perform as advertised and that the A330 will still be a viable competitor for such an aircraft?

    Thank you in advance.

    Regards ,

    • GTF: Not likely. Boeing has an exclusive engine supplier agreement with CFM for the 737. With CFM now prepared to have a version of the LEAP-X ready by 2014 for the COMAC C919 first flight and EIS by 2016, there is the natural assumption the engine will be ready for the 737, too. The LEAP-X has a diameter only about 1 1/2 inches more than the CFM56, which should minimize the installation issues. The GTF has a much bigger diameter.

      A320 Winglets: These are ready “now” while the A320RE would not be ready until c2014-15. Airbus has internally decided to proceed with the A320W as an option, with the A321 being the first one to get them in order to improve US trans-con range, which is marginal right now. We hypothesize that this will boost the likelihood United will order the A321W to replace the 94 757s it has.

      787 gap: Yup.

      • Hello Scott,

        I think the LEAP-X has a much larger diameter than CFM56.
        I may be wrong, but could you verify your source?

        Thank you for updating us through you blog.



  2. This has been their position for a while now as they’ve waited for an engine and other tech capable of giving them the 20% improvement in operating costs. The new CSeries isn’t burning up the market with huge orders, and the C919 will end up being too heavy for the international market (like the ARJ21-700), so it sounds like they both feel pretty safe from competition right now. And like you say, both companies have other projects/expenses to deal with before starting on a next-gen narrowbody.

  3. A new landing gear for 737 would mean a new wing.

    Not gonna happen.

    As to United, who cares what they order. They have no way pay up, and probably won’t in the future. Ever. Ryanair money is REAL money. United money is highly leveraged, and printed on flash paper.

  4. Well, it looks like I was right, when I said that the A320 will be the first to get the winglets, not the A321.

    “Air New Zealand will launch the new sharklets at the end of 2012 as part of its recent order for A320 aircraft. Airbus says the A321 and A319 will follow in 2013.”

    Looks like your source is not reliable 🙂

    • United has put over to 2010 the replacement for the 757, which is potentially the A321W. ANZ was ready first. It’s that simple.

      • The point was about which aircraft will be equipped with the winglets first. You said A321, I said A320 will be the first one into service with the winglets. From the plans I had seen, A321 is down the list of the SA family by some distance. This is regardless of who buys the planes, NZ or UA.

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