Counting down to 737-10, NMA

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Introduction

Oct. 27, 2016, © Leeham Co.: Boeing faces decisions in the near term on whether to proceed with the 737-10 stretch of the MAX 9 and the New Mid-range Airplane (NMA) to serve the Middle of the Market sector (MOM).

The 737-10 is intended to compete with the Airbus A321neo, stemming significant bleed at the top end of the 737 line.

The NMA will address the top end of the MOM sector, carry more passengers and have more range than the Boeing 757 and A321neoLR.

Boeing still has critical issues facing it before proceeding with either airplane.

Summary

  • A simple stretch to create the 737-10 has technical and operational issues.
  • The proposed date for entry-into-service still gives Airbus an insurmountable lead.
  • The market for the 737-10 remains limited. Is the return on investment there?
  • The market for the NMA is identified in the abstract—but price will be a key driver.

Discussion

Market buzz indicates Boeing may decide by year end, a mere two months away, whether to launch the 737-10.

LNC’s own intelligence indicates that the design will be the simplest and least costly of several options studied: a simple stretch, adding 12 seats, with no major changes to the airframe, wings or engines.

  • Aviation Week recently published articles on the 737-10 and the NMA.

A thrust bump to the CFM LEAP-1B engines may be included to help the longer airplane get off the runway, although early this month Mike Sinnett, VP of Product Development, said no decision had been reached.

Declining comment

Boeing declined to make Sinnett available for an interview to dive into some of the obvious questions about a stretch 737-9. It also declined to answer any questions put to it by email.

But here are some of the issues Boeing is addressing in its studies; the question is, what are the answers?

  • At the Farnborough Air Show, Mike Delany, vice president and general manager of Airplane Development, said the 737-10 could have an articulating landing gear to give the airplane some height for a larger diameter engine or to help take off rotation. What is the decision?
  • One engine option in the AvWeek article is using the LEAP-1C, a larger diameter engine than the LEAP-1B developed for the MAX; or the LEAP-1A, likewise a larger diameter engine. This implies taller gear, hence the articulating gear. What other changes would be required?
  • Sinnett told LNC Oct. 4 that no decision had been made at that time about whether the 1B will have a thrust bump. If the LEAP-1B remains the choice, how much thrust is available in a thrust bump without expensive changes to the engine itself?
  • If no thrust bump is needed, what does this do to field performance, which is already much longer on the 737-9 than on the 737-8?
  • What if any wing modifications will be required to improve field performance?
  • Even if Boeing uses the 1B with or without thrust bump, fuselage plugs will make the take-off rotation even more shallow than it is on the 737-9 (going back to field performance, of course)—does this then mandate landing gear revisions?

Market size

How much market demand is a big question. Boeing CEO Dennis Muilenburg said a MAX 10 might be ready for EIS by 2019 or 2020. Unsaid is that this has to be the simple version; a more complex set of changes pushes EIS to 2021/22 or even later.

Given the massive sales lead the A321neo has over the 737-9 (3:1 to 5:1, depending on the point this is measured and assumptions of MAX TBD orders), even a 2020 EIS means the A321neo will have a lead of at least three years in service and as much as 10 years in orders. (The A321neo was supposed to enter service this year; it won’t until early 2017.)

How much market is left for the MAX 10? It can’t be much. Also: Boeing may launch a replacement for the entire 737 family as early as 2023, for a 2030 EIS. There also have been indications that a program launch might come earlier to have an NSA (New Small Airplane) EIS by 2027.

Neither date bodes well for a 737-10 that enters service in 2020.

NMA for MOM Sector

The other decision Boeing must make is whether to proceed with the NMA for the MOM sector.

Market buzz suggests Boeing could make this decision next year or certainly by 2018. Muilenburg publicly talks about a 2024/25 EIS.

While Sinnett, the product development VP, said the configuration of the NMA isn’t set, as does Airbus, the consensus appears to lean toward a Boeing 767-type design of 2x3x2 in coach and a range of 4,500nm-5,000nm.

Barry Eccleston, president of Airbus Americas, told LNC Oct. 2 that the NMA needs a 50,000 lb thrust engine and he doesn’t believe one will be available by 2025, and possibly not even by 2027. By 2030, an open rotor engine might be available for the NMA.

Boeing declined to address this in a question emailed.

What’s the market demand?

Click on image to enlarge.

Click on image to enlarge.

But the market demand has been a moving target. The Aviation Week article included the illustration showing the MOM sector as defined by Boeing and AvWeek. The illustration shows a very small core market but a much broader overall sector. Which is it?

Furthermore, when Airbus launched the A321LR, Boeing’s Randy Tinseth, VP-Marketing, said the Airbus market demand project of about 1,200 airplanes “laughable.” Since then, the head of sales, John Wojick said the market was 2,000 and later 4,000. Boeing’s most recent CMO increased the small medium wide-body demand upwards,

Boeing declined to clarify the market demand in a question emailed to it.

At what price?

Lessors Air Lease Corp and CIT Aerospace each told LNC the demand will depend on the price Boeing offers the NMA. The higher the price, the lower the demand.

Lessors and airlines LNC spoke with want an airplane (in today’s dollars) in the $70m range.

This is a tall order that may be impossible for a brand-new design that requires new tooling and production.

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