Boeing 737 re-engine studies very much alive

Boeing officials like to downplay the prospect of re-engining the venerable 737, but studies are very much alive as the company tries to figure out what the market wants and how to respond to the Airbus A320neo.

Boeing has shifted focus on re-engine studies despite already having a solution, officials said during a pre-Paris Air Show media briefing.

John A. Hamilton, the chief engineer on the program, told Leeham News that Boeing is evaluating a fan smaller than the 70 inch diameter of a CFM LEAP-X, which will require changes to the nose gear, to a size that will fit without changing the gear but that is larger than the 61 inch fan on the current CFM-56 5B engine.

The trade-off, Hamilton says, is fuel burn and noise. For every inch the fan is smaller, specific fuel consumption (SFC) is reduced. Hamilton said Boeing is studying just what the trade-off is.

An Airbus official told us that for every inch the fan diameter is reduced, fuel efficiency goes down 0.3 to 0.4 percent. However, an aerospace engineer told us the reduction is not linear, but rather the differences scale on a non-linear basis.

An airline fleet planner familiar with the new Boeing direction told us the studies now underway revolve around what he calls a “hybrid LEAP-X” engine, one with a 66-67 inch fan. The loss in SFC from the smaller fan would be perhaps 1%, he said, but the real issue is that the engine will be noisier than the 70-inch LEAP-X. With the prospect for Stage 5 noise standards to be adopted later this decade, noise is significant.

We asked Hamilton, at the Boeing briefing, about future noise regulations, particularly in Europe where environmental regulations are becoming increasingly aggressive. Would these noise and emissions regulations force Boeing’s hand on re-engining, we asked. Hamilton noted that Stage 4 is in effect today but most airports continue to operate at Stage 3, so transitioning to Stage 5 from Stage 4 would take decades, he said.

Boeing’s 70-inch LEAP-X solution means a significant “work statement” on the 737RE. The nose gear has to be raised 6-8 inches, the wing, wing box and surround structure requires strengthening, and the systems architecture—with roots in the 1960s and updated some throughout subsequent iterations of the airplane—will require major modernization to meet current FAA regulations. If Boeing proceeds with the 70-inch solution, the cost is estimated by Boeing Commercial Airplanes CEO Jim Albaugh to be about the same as the cost for Airbus on its A320neo program. This was publicly announced to be about 1.5bn Euros, or about $2.2bn at today’s exchange rates.

We learned separately from the briefings from a company official close to the studies that the “hybrid LEAP-X” means no nose gear modifications will be required and that costs of the total work statement could be reduced by 10%-20%.

Critical to the decision-making is just how extensive systems upgrades will be required by the FAA.

Boeing’s continued work on the engine (along with CFM, obviously) is significant. Customers are pressuring Boeing to reduce SFC well in advance of the prospect of the entry-into-service of the “new small airplane,” or NSA as Boeing calls it, around 2019. Boeing claims the 737-800 is 8% more efficient today than the A320 and it will be 2% more efficient than the A320neo. A re-engined 737-800RE would reclaim the 8% advantage, Nicole Piasecki, VP of Business Development and Strategic Integration, told the media in the air show briefing. She grudgingly acknowledged the 737-700 and 737-900 aren’t as efficient as the A319 and A321, in response to a question from The Seattle Times’ Dominic Gates.

The following chart was presented by Boeing’s 737 program VP, Beverly Wyse, to the media at the air show briefing, illustrating the percentage advantages claimed by Boeing.

Source: Boeing

A study by AirInsight, largely affirmed at least a portion of the Boeing analysis. The study, which we co-authored, shows the A319 more efficient than the 737-700 and the 737-800W and A320 about equal with the A320neo about 1% more efficient than the -800W. AirInsight did not compare the 737-900 and the A321/321neo. AirInsight did not compare the prospect of a 737-800RE with the A320neo.

AirInsight’s study considered operating costs but not ownership costs.

Source: AirInsight. The study focused on the CSeries and it is the baseline in the above table. However, the comparisons between the A319neo and the 737-700W and the A320neo and the 737-800W are clear. AirInsight concluded that on an operating cost basis, the A320neo is 1% better than the 737-800W, affirming the Boeing conclusions.

Airbus, to no surprise, disputes the Boeing claims and points out that if the A320 were so deficient, it wouldn’t be capture 50% or more of the sales.

We asked Piasecki about this point and she responded Airbus wins the deals on price.

We followed up after the briefing requesting data from Boeing to support Piasecki’s claim, and received this response:

We compete against the CSeries with the entire 737NG Family–not just the -700. Most customers who operate -700s also operate larger 737-800s. When customers purchase the 737NG, they know they are buying proven economics, proven reliability and great flexibility to adjust their fleet model mix as necessary to meet changing economic and market conditions with commonality across the fleet. That’s extremely important for airlines and something that the Cseries, developed for a niche market, is currently unable to match.

Furthermore, the CSeries is a highly ambitious development program. It’s their first clean-sheet design of an aircraft this size with a high-risk supply chain and proposed rates and complexities they’ve never experienced. Setting aside the other major development programs Bombardier is undertaking, they have a lot to prove in terms of their claims for the Cseries. Even then, our analysis shows that -700 economics are competitive, particularly if you include switching costs associated with changing airplane types.

With customers pressuring Boeing to do something about SFC well before the prospect of the NSA, Boeing has said it won’t stand still on the 737NG. Its challenge is that the plane is so aerodynamically efficient, improving it further is difficult. Mike Bair, VP of Future 737 Programs, told us in March there are possible aerodynamic improvements to the vertical tail and aft fuselage beneath the tail. But the engine is where most of the improvement must come from.

Dominic Gates, of The Seattle Times, remarked to Piasecki at the air show briefing that the Boeing chart above seemed to make the business case for re-engining the 737.

Airbus believes that Boeing will do so. Airbus is expected to end the air show with some 600 orders and commitments (Morgan Stanley analyst Heidi Woods long ago predicted 500-1,000 orders by the end of the air show, a figure many, including Airbus, scoffed at). Airbus is predicting a major 737 operator will order the neo by year end (we believe this prospect is most likely Delta Air Lines, which also operates a large fleet of A319s/A320s). Airbus may have Heidi Wood’s 1,000 orders by year-end.

If Airbus reaches this number, Airbus is known to believe Boeing will have no choice but to proceed with a 737RE with an EIS for around 2016-2017. (The LEAP-X won’t be ready for EIS until mid-2016, and Airbus will have the lion’s share of the initial supply tied up with expected orders.)

16 Comments on “Boeing 737 re-engine studies very much alive

  1. Interesting numbers, but there appears to be some inconsistency in 320neo and 737 figures,
    Why is 320neo maintenance and crew costs so much higher.
    A 9% difference between 319 and 320 maintenance makes sense, but how can the 737-800 be 24% lower than the 737-700, and 12% lower than the 320neo?
    With GTF on the 320neo. Pratt are claiming serious double digit reductions in maintenance costs, so the difference between 7370800 and 320neo is IMHO a puzzle.
    Also, why would crew costs on the 737 be so much lower than on Airbus?

    • “Also, why would crew costs on the 737 be so much lower than on Airbus?”

      Hmm ( with a bit of the tongue in cheek),
      because predominatly US legacies use Boeing and those pilots
      are said to fly for a burger a day and the change to keep current?

      IMHO the Boeing numbers reflect an extremeley selective choice
      of data and carefull photoshopping of same.

      I still think the market will bifurcate in a way similar to the auto industry.

      • But those are not Boeing numbers. Scott said;

        “A study by AirInsight, largely affirmed at least a portion of the Boeing analysis. The study, which we co-authored….”

        Keep in mind the numbers on the AirInsight/Leeham study use the current versions of the B-737NG models, and not an RE version, while comparing the numbers to the A-32X-NEO.

        But it seems Boeing can get a B-737RE for about the same costs as the A-32X-NEO program costs, about $2.2B USD. So, I would think Boeing does the RE so they can also work on the B-777RE.

        • “But those are not Boeing numbers. Scott said;”:
          “A study by AirInsight, largely affirmed at least a portion of the Boeing analysis.”

          Which imho translates to “Boeing numbers not completely bull”.
          The graphic is from and by Boeing and obviously very selective.

  2. Interesting article form Dominic Gates:

    “They don’t know what to do on the narrowbody. They are in a very, very dire situation,” said a senior airline executive in charge of fleet planning with a leading global carrier. “Airbus holds the cards and has been playing them very carefully.”

    In a pre-Paris briefing, Boeing vice president Nicole Piasecki made clear that putting a new engine on the 737 is still under consideration.

    She argued that the current 737 delivers to airlines 2 percent better operating economics per passenger than the promised A320neo will in 2015, and that a re-engined 737 would restore the Boeing advantage to a full 8 percent.

    Those figures are hotly contested by Airbus and derisively dismissed by the senior international airline executive. But assuming they are accurate, why would Boeing bother to spend $5 billion to $10 billion on a risky new airplane venture if it thinks a $1 billion or $2 billion re-engine program is enough to beat Airbus?

  3. I prefer airline figures comparing the 737 and A320 iso Boeing figures.

    .Of course Boeing will downplay any Delta’s that don’t fit them, what else should they do?

    The 737-800 is a bit longer and lighter. No miracles here. E.g. the 737 cabins are 9g crash certified instead of 16g. The 737 has no cargo deck option, a narrower cabin shorter landing gear and lower BPR engines.

  4. Most of the B737-800 advantage is from a different seat count, I saw studies working with numbers as low as 150 versus 164ish for the B737-800. This is misleading as both aircraft are very similar in size with the B737-800 having a slight advantage. But both are limited to 180 seats, and commonly flown with 164-180 seats even by legacy operators (Lufthansa now has 164 seats on their A320).

  5. The 738 is actually certified to 189. A 5 per cent advantage is not to be sneezed at. Together with the lower weight, it is no surprise it does better on shorter stages. On longer stages you would expect the higher fuel consumption (I presume because of the lower BPR) to kick in and give the advantage to the Airbus. No miracles there.

    As for crew cost, it’s simply stupid to include this in a type comparison. For every operator, the crew cost for either the 738 or the A320 is going to be identical. So it will have no bearing on their decision. It therefore tells us nothing at all about the competitiveness of the planes against each other.

  6. An overall comment on competitiveness. Airbus has now sold all of its 2016 NB production. By the end of the year 2017 maybe sold as well. Where’s Boeing by comparison?

  7. “An industry source told Reuters that Indonesian flag carrier Garuda Indonesia (GIAA.JK) was also set to announce orders for 25 A320neo planes worth around $2.1 billion at list prices at the air show. (Matthias Blamont; Editing by James Regan)”

    (= switching 737NG operator)

    • So what, Keesje. How many A-32X/A-32X-NEO operators do you think will switch to the Boeing NSA, or B-737RE when the numbers come out at 8% or more lower than the NEOs?

      None is not an answer. Airlines switch from one OEM to the other all the time. In the NB market it just so happens to be EADS/Airbus’s turn right now.

      I’ll be A-32X carriers like AF, LH, KM, BA, IB, etc. will take a good look at the new Boeing proposal when it is announced. Carriers like DL, AA, WN, etc. will probibly become launch customers.

      • That’s not the issue. If Boeing’s line were true, then Garuda would not have taken A320NEOs, SAS would not have taken A320NEOs – the 738 is cheaper at list, has more capacity, and according to Boeing is at parity in operating cost. It’s obvious that either (i) the fleet planners at Garuda and SAS are stupid, or (ii) Boeing’s line about the comparative economics is not true. Take your pick.

  8. KCTB it denounces the new Boeing line that endless repeats the A320 Neo will be on parity with the 737-800. Non-sense of course, but if you often repeat it, for some willing ears it becomes at least half truth. Last week McNerney said he saw no customers switching to the NEO. SAS was quickly dismisssed (nobody asked why they didn’t order 737s..) .

  9. I doubt Boeing, or Airbus are lying like both of you imply (about Boeing). We do not know how deep the discounts were that Airbus offered for the price, support, traaining, spares, etc. It could be just a better econmic deal up front that was better than what Boeing offered.

  10. .. the thought Airbus might actually offer something better then Boeing is still a no-go area for some 😉

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