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.
Hello,
What do you think of possible tweaks on the A320NEO such as increase tankage rumored on the net ?
It might be old story, but :
http://www.noticiaslatamsales.com/en/editions/detail/jan2011/top-story/5/A320neo-Leaping-into-fuel-efficiency
“R&D cost to Boeing of 10%-15% of that of a new airplane” Too bad the project completion time is not at that same percentage. If a new airplane takes 7 years, a re-engine would be complete in a year.
Yes, if only the LEAP was available before 2015/16. Doh!
Increasing the tankage (fuel load with aux. tanks) decreases the revenue carrying capability (cargo and/or pax). There are two ways increased tankage will add to the overall preformance, with the increased rang.
1.) increasing the MTOW, but this adds to the OEW of the airplane, so you need more fuel carried to get the range you want.
2.) increase the size of the airplane along with an increase in MTOW.
Either way you end up with a heavier, more fuel consumpting airplane.
What you want in the PIP for the A-320NEO is reducing weight and/or aerodynamic improvements.
TC, the same equasion that shows the estiminated costs of the RE airplane compared to the replacement airplane does not work when you consider the engineering and redesign time needed on the OEM side, and a new derivitive engine from the engine OEM from the basic engine that is still far from certification.
Leeham News is an excellent source of high quality aerospace intelligence, a truly valuable resource for airlines, manufacturers and the rest of the value chain. I am a frequent visitor. Thank you and please keep up the good work.
Below is a link to an article named Shuffling the Deck – which examines the new single aisle competitive landscape. It focuses on winners and losers and, in particular, the initial catalyst of this quandary – the Bombardier C-Series. Was Bombardier smart to shake the beehive and not expect to get stung? Why did Bombardier not initially position the centre of gravity of the C-Series lower, closer to its core client base of its regional jet customers?
http://www.avanticonsult.aero/blog/files/97e7a0e011bd25f79e36ec5ca569e496-32.html
I think the possibility of NEO’s outperforming the RE’s because of carefull compromises by Boeing is a topic to hot to touch for now. Boeing says it won’t, Period. Saying the RE wil be better x % without including payload-range, cargo capability, comfort is steering perception IMO. The market will decide..
Of course, Boeing select the absolute best case for the 737-800. On sub-800nm sectors the 737-800 is more economical. But anything over about 1,200nm the A320 moves into the lead.
Also noteworthy is the fact that Boeing doesn’t mention the 737-700 vs A319 or 737-900 vs A321. For both those, the Airbus offering is significantly better. The A321neo will win a lot of orders from 757 operators. I expect DL and UA to be next for it.
The A320NEO will be in a better competitive position versus the B737-RE than the A320″CL” versus the B737NG. That is because the fuel burn will be reduced more on the NEO. That doesn’t mean Airbus will gain significant market share. Most B737 operators – especially those will large fleet base – will go for the RE. But small operators and new entrants will favor the A320-NEO. Also, the A321-NEO is very competitive.
Single aisles will probably raise in capacity (both C919 and MS21 are considerably larger in their basic version), and the C-Series and new Embraer will beat the A319/B737-700 (again, airlines operating the aircraft today will probably not switch).
For Boeing a very unlucky situation. I wouldn’t blame the Boeing leadership for bad decision making, their reasoning makes sense. I am quite sure Boeing will launch a new aircraft in near future (mid decade), when they realize their pricing power on the single aisle market is weak.
Boeing “missed” the opportunity to launch an all-new aircraft for EIS in 2017 two years ago. But launching such an aircraft in the height of the economic crisis and the B787-desaster would have required some serious boldness at Boeing leadership. Understandable they didn’t go that way.
Comes close the the projected figures within the NEO re-design, the 15% is reasonably achievable to take that figure a tad further some material enhancements & minor airflow changes are under consideration.
I saw some figures that showed the current 737-800 has a 5% or so fuel burn advantage per seat against the A320 for short missions while the A320 enjoys a similarly sized advantage on long missions. There are more short than long missions so the 737 is ahead on average.
We can assume that the A320 NEO and 737 RE will see similar sorts of improvements in fuel burn. Except that the A320 can add the winglets that the 737 already has and it can use a bigger fanned engine. Winglets and big fans benefit long missions more than short ones. This means, I think, that the A320 and A321 NEOS will move further ahead of the equivalent 737s on long missions, while being roughly comparable on short ones.
At the cost of commonality, airlines that already have 737s may find it worthwhile investing in some A320s or A321s for their longer missions.
The other joker in the pack is the degree to which the PurePower GTF engine beats the Leap on fuel burn – if indeed it does at all. The GTF is arguably a technological step change where the Leap is a refinement of a previous generation engine. Boeing doesn’t offer the GTF, while Airbus does.
the gtf has the advantage over the leap when the turbine section will be optimized. unfortunately the 737 has the disadvantage of lower wing clearance unable to leverage bigger fans thus the leap engine approach. an antonov an-148 configuration may be adopted by the 797 to get all the fan diameter it needs that may be later evolved to a box wing to use unducted fan prop jet
What does “90-95% commonality” mean? Is that by overall airplane parts, or part cards? Or is it spare parts commonality only, and then again by parts number or rather by value, with the latter being the figure that counts with airlines? Few people really know what they are talking about when using the buzzword “commonality”.
Worth to not that the 747-8 started with an 85% commonality objective to the 747-400 in spare parts value, but ended up at around 50%.
So what does “more efficient, all-in-all” really mean? Is that in terms of specific fuel consumption (engine level, uninstalled), or in terms of fuel burn (aircraft level), or in terms of operating cost (cash, direct, total?), or is it in terms of net present value? And is all that per seat or in absolute terms?
The 737-800W is certified for 189 seats, providing for an instant 5% (technical) advantage in per-seat economics over the A320. In practice, seat layouts may be very different, mitigating or eliminating this technical advantage.
Moreover, cost figures do vary between airlines by more than 100% depending on the airline business model and operating procedures. Hence it is no surprise that figures quoted by fleet planners will differ wildly from OEM’s claims.
I hate to say it but additional reference tends to add confusion, not clarification.
One major result of B’s REing the 737 is that G. Kelley has made very clear that SWA will continue to go exclusively with the 737, including replacing the 717s as soon as possible, so bye bye C Series as a replacement for them and the 733s and 735s, a huge disappointment for BB I am sure. B holds the leases on I believe 80 717s, so they have a lot of flexibility in helping SWA get rid of them in exchange for 737REs, especially when there appears to be a mkt for the 717s with DL and maybe others.
http://www.flightglobal.com/articles/2011/08/04/360387/southwest-ready-to-discuss-re-engined-737-with-boeing.html
http://www.flightglobal.com/articles/2011/08/05/360443/southwest-appears-less-bullish-on-717.html
If Scott is right (that the RE will be the minimum needed to get LEAP Xs under wing, and only LEAP Xs not GTFs), then one way of looking at it is that the RE is simply an extension of B’s strategy to PIP the 737NG until the NSA comes along, now scheduled for say 2003-4 instead of 2019-2020. Perhaps B sees the costs of each not as two separate things but one project culminating in the NSA. This strategy is appealing because it seems at least with SWA and AA to have resulted in B’s keeping important customers, makes the 737 competitive with the NEO at least with other 737customers, which airlines want, addresses the legit criticisms that the NEO will be more efficient than RE on some routes, opens the last half of the next decades to NSA dominance because it will be clearly superior to the NEO in all respects, will allow B to get the 787 and 777 issues resolved in a calm, less pressure cooker environment, and most important may stench moves by its customers to replace 752s with A321NEOs. Also, if the pundits are right that engines are the major source of fuel efficiency and will be through the next decade and perhaps beyond, then it will be difficult for A to leap frog the NSA with their new plane in 2030 +/- if B designs the NSA to be easily updated with new engines and perhaps minor airframe advances.
In addition, there is a lot of interest in the RE/NSA from sources other than airlines. PW will pay a lot not only to get a new plane from that will take the GTF, but also to re-kindle their relationship with B which might produce GTFs for the 777x. And, it seems, Spirit is jumping at the chance to participate almost as a full partner in the RE process.
http://www.flightglobal.com/articles/2011/08/04/360394/spirit-aero-bullish-on-737-re-engining.
Lastly, B’s approach to these issues is truly refreshing. They are actually thinking carefully about them, a sea change from how they approached the 787. They certainly have seemed confused at times, but at least this time around those uncertainties arise from the nature of mkt and financial, technical, production, and other realities which B seems to be confronting forthrightly.
Will Southwest buy any 137 seat 700REs or all 800REs? If Southwest commits, maybe we will see a 149 seat 750RE.
I don’t remember who wrote the comment be it was basically stating the fact that the airlines are also looking to who will actually deliver the aircraft on time and close to the agreed price. I think this was referring to the fact that a lot of money has been placed as a down payment on the 787 with no major deliveries to date.
Good point. Albaugh has made the point over and over that B could not figure out how to rapidly increase NSA production to up to 60/mo with first delivery in 2010-20, while ramping up production of the very simple RE Scott describes ought to be a lot easier.
Leehamnews, you wrote:
“A plane that is, all-in, about 10% more efficient than today’s 737NG. By all-in, this includes direct operating costs and ownership costs. This estimate is from a network carrier fleet planner who has seen the data made available so far from Boeing. Since the 737NG already has winglets, the improvement isn’t as dramatic as the A320neo/sharklet combination.”
I doubt the A320NEO will have an all-in cost improvement of >10% (and I doubt that the 737RE will get near 10%, for that matter). A 15% fuel burn reduction equates to about 6% cost reduction at present share of fuel in operating cost (40%). Sharklets will bring another 0.8-1.6%, on the same basis. Where would the other >2.5-3.2% come from, given that Airbus is not going to do any major improvement beyond re-engining? If Boeing also goes with a de-minimis approach, and won’t get the same level of fuel burn reduction due to a smaller fan on the LEAP engine where would they get the balance of efficiency improvements from? This does not sound very plausible, and I would guess that someone has mistaken fuel for operating efficiency somewhere.
Andreas, Your and Scott’s scepticism about B’s RE claims must be understood by B also, if only secretly, and they must know that unless they do something better they will lose lots of 737 mkt share to A. This reality is the main reason why I suggested in #15 that B may see the RE as an interim stepping stone an NSA in the 2023-4 time frame. The alternative for B was to improve the 737 much more that they now seem to be planning for, but I suspect that the costs and possible delivery delay risks would have made that version almost the equivalent of a new plane.
What percentage gain would a reprofiled cockpit section give the 737?
I don’t know. Keesje has done a drawing of this and other major changes to the 737, including longer landing gear, but from what Scott is saying, B are not going anything like that route.
Nothing noteworthy.
I think the A320 will benefit slightly more from the re-engining then the 737RE because of a more optimized fan. Add a few percent from the Sharklets and even the A320 is probably slightly more fuel efficient then the 737-800RE. But nobody really knows.
If Airbus cannot upgrade its production capacity for the 320, with that many orders and commitments, the 737 will still win in the 2016 and later period with open production slots. It will be like the 787 case where the absence of open production slots provided the A350 with many sales opportunities.
Whatever the final cost advantages between the NEO and the NEXt, Boeing had to do the B737NEXt because the market is asking for it. Mainly due to high oil prices, and the proliferation of low-cost airlines at this airliner capacity size.
If Southwest dumps its 717’s, Delta will gladly take these to retire its oldest DC9’s and MD’s. I think Delta has the best approach on airliner acquisition. They know how to leverage the advantages of fully-amortized old airliners in their business strategy.
As to the B737NEXt’s new production area, I’m rooting for Wichita and Long Beach.
http://planetalks.blogspot.com/2011/07/boeing-737nex-new-engine-extra.html
It should be very interesting to see how the BusBoys and Big B handle turning up the manufacturing candle. I think by the first of the year the BusBoys will need to make a decision on how and/or where they will increase their production and by the second quarters Big B will need to be making moves as to where they will build the 737RE. I can see many different scenarios playing out and at this point I think it’s anybody’s guest. Both companies have issues and resources that need to be resolved and evaluated. I also believe that both companies will show some insight as to what their future plans for the next ten years may be.
Here is Albaugh’s latest statement on all this stuff.
http://www.bizjournals.com/mobile/seattle/blog/2011/08/boeings-albaugh-wants-to-upgrade-737.html
“Suggesting that re-engining is also in the cards for the 777, Boeing’s largest wide body aircraft, Albaugh said, “We believe that with a re-engine, we will maintain the position we have on the narrow body, and we think when we do a 777-X, if and when we do it, it will be much more efficient than the [Airbus] A350-1000.”
If and when Boeing does a 777-X, a tbd way. it will be much more efficient then the A350-1000, of which Albaugh says he still doesn’t know how it will look.
If he thinks an aluminum plane can beat a CFRP plane, what was the the 787 and 350, a grand experiment?
Airliners going after profits for airlines, gets flimsier and flimsier. Just compare a belly landing between a C-47, and an A320 or a B737.
This is the main reason why present structures are lighter, plus more efficient engines, lighter systems, lighter interiors and other improvements in materials.
Will the 737NEXt follow the 747-8 in using new aluminum alloys, or just a reengining and other minor tweaks for $1 billion?
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