Aug. 1, 2016, © Leeham Co.: The order last week by JetBlue for 15 Airbus A321neos, with the option to convert these to A321LRs for potential trans-Atlantic service, comes within two weeks of Norwegian Air Shuttle converting orders for 30 A321neos to A321LRs. NAS is going to use the LRs for trans-Atlantic service.
We’re aware of at least two more campaigns for A321LRs with carriers that would use them for trans-Atlantic operations. There are undoubtedly more.
The A321LR is an option, allowing airlines that have already ordered the 321neo to switch before construction of the planes begins. The LR EIS is 2019.
To date, Air Lease Corp, TAP and NAS have ordered the LR. Astana is taking the LR on lease from ALC. The JetBlue and NAS deals up the pressure on Boeing to make decisions on whether to launch the stretch of the 737-9 MAX, to what’s commonly called the 737-10; and whether to launch the New Mid-Range Airplane (NMA) for the Middle of the Market (MOM) sector.
The NAS announcement is significant. NAS has a large order for the 737 MAX and A320neo families. The original intent was to use the MAX on longer routes and the A320neo on shorter routes. NAS is also acting as a lessor and leasing out the A320neo family. Now, with the selection of the A321LR, this is another airline that chose the A321LR over the MAX 9.
Boeing has been eclipsed by Airbus in the single-aisle strategy. Boeing publicly won’t concede this, but the customers vote with their pocket book and the order tallies are clear: the A320neo family commands nearly a 60% market share. This is bolstered significantly by the A321neo vs the 737-9. The A321neo outsells the 737-9 by almost 4:1 through June. (Airbus hasn’t released July data yet.) Airbus has 1,129 orders for the A321neo. Boeing doesn’t break out the MAX orders by sub-type, but official internal figures put the MAX 9 sales at about 290. (LNC believes the number is closer to 413, based on LionAir’s huge MAX order and the current 737NG 800/900ER split.)
Boeing contends there is more upside to future sales for the MAX family than Airbus has for the A320neo family. John Wojick, Boeing’s chief salesman, correctly points out that Southwest Airlines and Ryanair have ordered only a fraction of the MAXes they need to replace their NG fleets. Others are in the same space, Wojick says. Airbus, he claims, doesn’t have the same potential upside.
Be that as it may, the A321neo is a far superior airplane to the 737-9 MAX, which has operational limitations. Despite public claims to the contrary, the market has spoken.
Boeing acknowledges publicly it’s working on a stretch of the MAX 9. Conventional wisdom said to do so would require a new wing, new engines, new wing box, new main gear and all the knock-on effects from these changes. These might even require a complete recertification of the airplane. All-in costs were estimated by some at upwards of $8bn.
But at the Farnborough Air Show, Boeing programs chief Mile Delaney confirmed that Boeing is looking at an articulated landing gear similar to what was on the World War II fighter, the Grumman Bearcat.
This two minute video shows the design.
This allows Boeing to use the current center wing box and avoid costly modifications. One question that remains, according to a consultant LNC spoke with at Farnborough, is whether this would pass muster with the Federal Aviation Administration over a single point of failure certification review.
CanaccordGenuity’s Ken Herbert wrote last week the MAX 10 is likely to get a green light, while the NMA is still a question mark.
“We believe BA is closer to a larger 737 MAX (with an expected $2B ceiling on the development costs), but the final decision on the new midsize airplane (NMA) is likely not until 2017, with official BoD approval maybe by H2/17. We understand that the real issue for the NMA is the ultimate cost to produce the aircraft, and there is substantial uncertainty within Boeing on its internal estimates,” Herbert wrote.
The budget ceiling cited by Herbert on the MAX 10 is in line with our information. We also concur that an NMA decision is likely next year.
I’ve previously opined that the 737-10 would be too little, too late. Entry-into-service wouldn’t likely be until about 2020. By then, the A321neo will have been in service four years (its EIS is supposed to be this fall). The A321LR’s scheduled EIS is 2019. A $2bn MAX 10 probably can only approach the A321neo, not better it, and it will be too late to recover lost market share. However, it might be good enough to prevent split decisions like that of Korean Air Lines, which ordered the MAX 8 and the A321neo. It was this order that Ray Conner, CEO of Boeing Commercial Airplanes, cited last February when he raised the alarm to employees and expressed a desire to have a stronger competitor for the A321neo.
The future of the NMA remains, at this point, to uncertain to predict. LNC believes Boeing must do the airplane. Company officials have been clear that they really don’t want to build the 787-8 anymore. This is a loss-making airplane, with significantly different design and production compared with the profitable 787-9/10. Abandoning the 787-8 (which is largely what Boeing has already done) leave a huge gap in the product line.
A recent survey by Aviation Week, Penton Research (AvWeek’s affiliate) and the aerospace analyst for Bank of America Merrill Lynch concluded there is no consensus about an NMA. But they surveyed more than 500 airlines, which must include many who are more interested in a 737 replacement than in the NMA sector. The airlines that operate Boeing 757s and 767s across the Atlantic or on other mid-range routes appear more interested in a 220-260 passenger, 4,500nm-5,000nm airplane than the oft-talked about 757 replacement.
A replacement for the 737 is an entirely different category airplane.