It’s stunning news: Boeing may be shelving, at least for now, the prospect of a new airplane widely anticipated to be announced at the Paris Air Show.
Boeing previously shelved the prospective 737RE (Re-Engine).
Buckingham Research, a boutique New York investment bank with a good track record of forecasting Boeing moves, issued a note today in which it said Boeing is rethinking the new airplane. Buckingham writes:
BA changing course and; keeping options open. Our view has been that BA will develop a new airplane and not re-engine the 737. Further, both consensus and our expectations anticipate BA will announce a new 737/757 sized airplane at the Paris Air Show in June. We’re changing that view and do not believe BA will announce a new airplane at the show. We think BA may not gain an ‘approval to offer’ for a new airplane until late 2012/early 2013. With the potential for meaningfully lower R&D spend through 2014 as 787 R&D declines, we think that’s very bullish for…[Boeing].
Buckingham now does not expect any “new airplane” announcement at the air show.
Our own, independent information confirms that Boeing remains split internally about what it wants to do. Although the 737RE remains an option, it’s not particularly active and corporate officials in Chicago have frequently said they do not see a business case for the RE. We’ve been working on these developments since last week, and were largely sidetracked by the Southwest Airlines situation.
As for the new airplane, although Mike Bair, head of the 737 future airplane program, gave a series of interviews last month (including to us) in which he seemed pretty confident that a new airplane more or less centered on 180 seats as the optimal size, and for a 2019 EIS.
What we are told is that there remains a split about the size of the airplane–with some wanting to start in the 737-700 (140 seats) size while others want to begin around 180 seats. There also remains a split whether the airplane should be a single aisle or a twin aisle.
For more color on this, see our companion posts.
They don’t need to announce a new plane so early for EIS around 2020. And they will be pretty much tied up with 787 work for the next couple of years anyway. The reason for announcing the plane now is to put down a marker against the A320 NEO, to slow down that plane’s momentum. So I guess Boeing has decided keeping its options open is more valuable. As the new plane seems to be a marginal (albeit important) decision for them, they’ll also want to consider what they do about the 777 and 787-10 as well as any new engine technologies that might be available if they hold back on the new model for a few years.
Following John Leahy’s mischievous comments last week, I do believe however that absent a re-engine Boeing’s new plane will directly substitute the 737 – perhaps a bit bigger, but single aisle.
Quid novi sub sole?
I would bet 10 ruppees that the 737 will be RE.
I was always scpectical of the merits of a new Boeing SA aircraft in the 2020 timeframe, as discussed in my own blog in three parts. Our own performance analysis gave the same answer as Leahy described last week (no, we did our analysis way before…).
Well, Mr Leahy is right then. How much of a gap will the A320NEO open on the 737NG…
I really am not surprised by this, considering that,according to news reports, Boeing management and engineering seemed befuddled that the rip in the skin of the 737 over Arizona meant failure at a much lower amount of pressurized take-offs and landings than expected. This says a lot about design, structural integrity,engineering protocols etc. Perhaps considering an entire new airplane for the market, now used by the 737, would be prudent.
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1. All this blogging about B v A competition between 320neo v whatever B does is fun and perhaps cathartic, but it should not obscure the overwhelming, most important goal for each company, trumping all else: To get the 787 and A350 out the door and to increase production to the max ASAP.
2. In this respect, A is in a much better position than B IMO because they no longer have the drain of the A380, the A330 and A320 programs are highly profitable for years to come, and they can make a reasonable estimate of how much the A350 will cost in money and engineering resources. They can do this because they have learned from B’s blindingly stupid 787 management. Thus, they can reasonably calculate that they can do the neo without significant risk to the A350.
3. IMO, B cannot make the same accurate estimate of future 787 costs because they still are spending millions just to get first 788 out the door, and do not know what more they will have to spend, and therefore do not know what resources they can devote to the 737RE/new plane without threatening their ability to deliver the 789 and 7810 on time and ramp up production fast. It is imperative that B avoid the 788 mess with the 789 and 7810. They must show to their customers that they have learned from their 788 mistakes just as I think A will with the A350. The 789 and 7810 are competing against the A359 and -1000, and B must show that they can deliver their planes as reliably as I think A will be able to deliver theirs. I am not sure when this will be,probably some time in 2014, but until then B’s resources for news planes will be limited.
4. On the bright side, B gets two major benefits from the A320 neo: (1) They now know they will not have to produce a new 737 replacement until 2030 because A won’t be doing that until then, and (2) B can follow A’s lead and get the engine companies to pay for much of the cost of a major 737 revamp, greatly reducing the risk to the 787.
5. This opens the intriguing question of whether B can revamp the 737 cheaply 2016 and also deliver in 2020 a new twin aisle replacement for the 757 that Steven UH is demanding. More than 1000 are still in service, airlines are keeping the ones they have, US Airways wants the A321neo to have the 757’s payload/range, FedX is buying up all the 757s they can find, and the A321neo may give A an in for its entire 320neo line with US carriers which operate large numbers of 757s. Plus B has patented an odd short body twin aisle plane. A key point is that the 757 is a popular freighter while the A321neo is not, at least so far. And unlike A, B has been very good making freighter versions of their planes.
6. I think this dependes on when B thinks the such a program would no longer threaten the 787, and whether there is enough time to build the new plane from then until the date when airlines cannot wait any longer and go for the A213neo. What I am saying is that this plane is a much bigger threat to B than the A319/320neos.
7.My guess: B will revamp the 737 including RE for delivedry 2016 and announce soon their intent to replace the 757 at the time they think will cause current operators to wait for the new plane and not buy the A321neo. Or, maybe a revamp of the 757 as a 757RE/new wing etc and putting it back into production.
Nah, I really don’t believe they’ve shelved both the new airplane and a re-engine option, probably just mind games from Boeing. I think there’s an 90% chance they’ll do something and it’ll a re-engining.
Just amazing what a decision by A can make B insecure as a company. I think Boeing is also waiting on how good the A321Neo will be. If the A321Neo is suitable replacement for 757(meaning capable of the Transatlantic mission all year long), we will see an all new design. If the A321Neo just can’t make it will go for the re-engine.
If Boeing goes ahead now with a new design. Airbus will get its advantage back at about 2030, when the end of NEO design life is. Than Aibus can go for a all new design with all with even newer technology.
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