Interest seen in Boeing’s “797,” says lessor

May 16, 2017, © Leeham Co.: Air Lease Corp., one of the world’s leading lessors, sees

John Plueger, CEO of Air Lease Corp.

a “quite a bit” of interest from its customers in the prospective Boeing Middle of the Market aircraft, says its CEO, John Plueger.

Speaking at the Airfinance Journal conference in New York today, Plueger acknowledged with some push from moderator Mark Streeter of JP Morgan that pricing needs to be in today’s dollars in the $70m-$75m range.

It’s a figure Plueger has cited in the past.

From his view, Airbus can respond with the oft-discussed “A322,” an airplane with a slight stretch and a new wing, but he believes achieving 5,000nm in range—something the Boeing “797” will likely do—will be difficult. A range of 4,500nm would be achievable.

The A330-800, which he describes as a “terrific product,” could be offered with a lower gross weight and steeply discounted price. “It would be a strong competitor,” Plueger said.

53 Comments on “Interest seen in Boeing’s “797,” says lessor

  1. The US$75 Million pricing is a mighty challenge, less than the list price of a 737-800NG?

    Total rebuilds of “not so old” 767’s? Wing, engines, cockpit? But there are only ~150 B767’s that’s <10 years old.

    "I smell a rat"?

    • Exactly. You can’t even get a CS100 for that price. What’s this guy on?

      • @pegasusboots

        Pricing in the $70m-$75m range for a Boeing MOM would indicate that the list price would be somewhere between $130 million and $150 million (in today’s dollars)

        As for the CS100, Delta Airlines apparently agreed to pay “millions” of dollars above $19.6 million for each CS100.

        Strangely, Boeing attempts to embellish these facts with absurd claims, such as an unfounded accusation that Bombardier sold the 75 CS100s to Delta for $19.6 million each. Bombardier responds that such a figure is “millions” of dollars too low, and it is right. Such a price would have caused it to book a forward-loss provision of $930 million, rather than $500 million.

  2. “From his view, Airbus can respond with the oft-discussed “A322,” an airplane with a slight stretch and a new wing, but he believes achieving 5,000nm in range—something the Boeing “797” will likely do—will be difficult. A range of 4,500nm would be achievable.”

    A range of 4,500nm should be achievable for an A321LR Mk.2, further re-engined with RR UltraFan-type engines. Hence, I can’t see why a slight stretch with an all new and larger composite wing — using the same UltraFan-type engine — should struggle achieving 5,000nm in range.

    • 4500nm is just around 5200 miles, which is say the distance from Heathrow to Salt lake City, or just above 10 hrs flying time.
      It doesnt seem like that range , which even only around 10% of 763’s flying today are exceeding, is where a MOM aircraft should be .
      That range should be B787/A330 territory

      Whats next, a MOM that can do Heathrow -LAX , and at less than $100 mill ?

      • @dukeofurl

        We’re talking pax and bags only. In order to get the still-air operating envelope, you’d have to take into account additional payload, headwinds and sufficient fuel reserve — or anywhere between 15-25 percent reduction in the design range.

      • This “MoM-Thing” is to large extent driven by the Trans-Atlantic, there are however potentially significantly bigger demand in other areas. I can see demand for aircraft in with 200 – 250 seat capacity for 1) Thin longer routes (4000 – 6000Nm) and 2) Shorter high density routes (200 seats run into boarding and deplaning issues on short routes where turnaround times are important and run also into range problems for sectors longer than 4000Nm.

        Current twin aisles are either to big/heavy for both purposes and optimized for 5000+Nm sectors.

        If I was Boeing I would have considered building one air frame length 7 abreast twin aisle with a seat capacity of ~230 seats but with two wing, undercarriage and engine options. The 767 air frame section could serve as basis for this aircraft.

        1) For ranges of <3500Nm, low cost mostly aluminum wing, sweep, aspect ratio etc for lower cruising speeds, CAT-C, ~40 K-Lb engines and,
        2) For ranges of up to 5000/5500Nm, wing mostly CFRP's, high aspect ratios, higher cruising speed, CAT-D, ~45-50 K-Lb engines.

        • All that makes the wing too large and heavy, the current 767 problem.
          You arent going to have two wings on the same body, production inefficiencies rule that out before you even get to certification costs.
          Then there is a cheaper lighter long range plane cutting into Boeings 787 market, cant see top management agreeing to something like that in the next 15 years

          • Every time after several ideas being bounced around the same conclusion seems to emerge in my mind. A MoM aircraft doesn’t really exist out there, its an airline utilization of the best and most flexible utilization of whats available for their routes.

            (757 + 767)/2 is not equal to MoM.

            For Boeing 737″Max9″ + 757 + 767-300 + 787-8 = MoM.

            Every airline sculptures its own MoM “family”.

    • A322 composite wing (out of autoclave) First, with Brexit, where will the new out of autoclave be build, UK or Germany? Second, the out of autoclave composite wing will give Airbus a technological leap for the replacement for the A320 over 737….by 5 years if Boeing goes with 797?

  3. A great day for Boeing has occurred today with the first 737-8 delivered to Malindo Air. It’s a day for BA to celebrate.

  4. “Lessor seeks low capital cost new wide body for rock bottom price, notes all competitors, or theoretical partial competitors, even if cancelled, also are great products”

    Not a particularly insightful thought.

  5. An A322 with a 2m stretch and the same wing and gear as the A321neo might have some potential. Degraded runway performance, but a low cost change, and 12 more seats towards a mid capacity aircraft, as opposed to mid range.

  6. The A338 isn’t ““a strong competitor” right now, let alone against an aircraft 30t lighter. What are there 6 orders? What a joke.

    • The A330-200 and -800 are currently the only viable replacements for aging 767s, and I’m sure many airlines already have an offer from Mr. Leahy on their desks. Before they place an order they will want to see what Boeing comes up with.
      It’s a very difficult decision for Boeing. If they make the 797 from CFRP it will offer great performance but that bird will be a lot more expensive than the -800. To make it cheaper it would have to be made from aluminum, but in that case it will not beat the -800 in efficiency, only in trip cost. That again would narrow down the possible market too much.

      • If you put a new nose section, cockpit (787 commonality), wing and engines on a 767-300/ER (“767-MAX3”) the development cost will be within limits and you will have a very nice aircraft that can be produced and sold at competitive pricing. Target units, 8oo+?

        The 767-300/ER’s OEW is ~30T (25% less) than that of an 330-200. A “MAX3” could shed a few tons with the application of CFRP’s in certain areas. It’s seat mile and sector costs should be substantially better than any A330-200X?

        If they go this route they could have “money in the bank” to actively pursue an NSA starting with a larger A321/322 equivalent that will address the MAX9/10 woes and 757 replacement.

        • Anton, the double-bubble body of the 767 is not what is needed for this plane. Instead of the unpopular LD2 containers, a lighter and smaller solution with LD3-45 containers as in the A320 would serve the purpose much better. (As has been discussed here on Leeham.) So the body would rather be a flat/oval.
          There is no doubt this can only be an entirely new plane. I have also little doubt that it can only be made from CFRP to perform as required. The really difficult questions here all revolve around investment (in development and production facilities), production cost and the possible price it will fetch. And that is a tough nut they have to crack.

          • Thanks Gundolf, the oval carbon fuselage is technically the way to go for a small twin, but costs, market size?!

            The A322 could become a Boeing nightmare if Airbus do it properly.

          • I wouls still take Pluegers words with a graon of salt. Airlines are run by accounts, the successful ones. It doesnt matter where the savings are, be it opex or capex. As long as the savings are there (and its a good replacement for existong narrowbodies) Airlines will buy it. If a 757-X (or A325) can beat a 737 MAX 10 (or A321 NEO ) significantly on economics whilst also offering further range and of course more pax, it would be tempting for airlines. In fact it would be disruptive and could attract new entrants and increase competition. The question is can it be done.

          • Agree, hope Airbus don’t pitch the A322 at something more than 3500Nm, this will leave a market for a A330-200 “Lite” (5000Nm).

            The 321LR and theoretical 321XL with New Wing (4500+Nm) is a “niche” market for airlines that want it.

  7. I know a lot of people disagree, but Boeing must go all carbon, otherwise it will be too easy for Airbus. This means they have got to learn to make carbon planes cheaply. $70/75 million. NO. But $100 million to match the A330neo, a must. In other words they need to put blue sky between the 797 and any updated 321neo or updated 330neo.

    Airbus would then have to respond with an all new carbon plane themselves. In other words, a repeat of the 787/A350 situation whereby airlines rejected an updated A330 as a competitor to the 787. Yes I know the A330neo is a competitor to the 787, but the 787 will outsell it by at least 3 to 1

    • Not sure what Airbus could or should do. They have a “problem-child” with the 330NEO? Some options during the interim;

      1) A322, +20-25 seats, new wing, 3500Nm.
      2) A321ULR, new wing, 4500+Nm effective range with 100% pax.
      3) A330-200 Lite (“-500”), new wing etc, 5000Nm.

      For me the “original” A350-800 was/is what’s needed to compete with 787-9, but this will require a new wing with higher aspect ratio and new center section, range of ~7500-8000Nm. The XWB76 engines could be used or new GTF’s?

    • But the A330 is outselling the 787, and it has been outselling the 787 in the last 10 years. This is the reason Boeing is considering a 797 MOM. The 787, although an excellent plane, it never became the A330 killer it was supposed to be, and it never became a thru 767 replacement. The 787 became to large and to capable, an therefore a 797 MOM is needed.

      • Depends how far back you want to go, maybe the word should be outsold, not outselling-current,

        The B787 production rate is ~2:1 to the A330?

        Looking at the approximate production back logs:
        1) 787 – 672.
        2) 330 – 337.

        That tells me a different story.

      • My 3 to 1 sales in favour of the 787 is a prediction with regard to the future not the past. I think there will still be another 1200-1500 sales of the 787 meaning 2400-2700 sales in total, but only 400-500 sales of the A330neo. It does mean a massive profit for Airbus because the A330neo development costs are only $2billion versus $32billion for the 787. In other words, in the end I think the 787 will make a profit. Not a lot of profit because of the pressure on margins created by the A330neo and A350. By the way I think the A350 will sell a similar number to the 787

        • Didn’t RR fund most of the development costs of the 330neo series ?

          • Wonder if R&R is not starting to have second thoughts on the 330NEO? They don’t appear to be in a big rush to get the TRENT7000 on the wing of the NEO.

        • Of the four twin aisle models, I would guess the A350 and 787 are each good for a production of 2,000 to 4,000, the A330neo for 200 to 400, and the 777x for 400 to 800, before they are done.

          • The A350-1000 looks like a very competent aircraft to me. It may be the eventual late bloomer in the 350 family, like the 777-300ER.

            Not an expert but just based on video footage it looks very stable during approach and landing which tells often many things.

            Think there is a shift in the dynamics in the upper end of the market, maybe 777-9 will land up being to much aeroplane. The 777-8 could prove to much capacity for ultra long range, a “fancy” market but not bread-and-butter. (The Sydney-London route maybe a “pie-in-the-skie”?).

            The 787 program not a great financial success at the moment (schooling fees) but if was not for the 787-9 Boeing would have been, (you now in what street), and Airbus having its own way.

    • I doubt that we would see a repeat of the 787/350 scenario. There isn’t going to be a “drug like rush” to order the 797 just because of its carbon content.
      We are living in a different world – oil is $50 a barrel now so carbon fibre doesn’t quite have the magic it used to have in the sales pitch.

      The important point is that Airbus can build a 322 much cheaper than Boeing can build a 797 and will apply massive pricing pressure to dent sales of the Boeing aircraft. It doesn’t matter if the 322 can’t cover the top end of the “Mom market” – it will win plenty of sales in the market it can cover and this will hurt the business case for the 797 and thus threaten the ROI required to fund its significant development costs.

      Its not a case of building a “one size fits all” aircraft but rather capturing a significant share of the market for a reasonable cost that gives a good ROI to shareholders. The A322 is very well positioned to do exactly that.

      • You are making my point.

        Airbus can do something quite cheaply. They have two options: They can stretch, rewing and even re-engine the A321 to give a confortable 200 seater for medium long haul. They can also take an axe to the weight of the A330-800neo to do a comfortable 220-240 seater for medium long haul. The first is more likely, but it won’t do 220-240 seats without stacking and packing

        What can Boeing do cheaply? Not much, although I never understood why they gave up on the 787-8. In other words, why did they not rework the 787-8 with the improvements they made to the 787-9/10

        If Boeing don’t do something very, very good, Airbus will clobber them with something that is cheap

      • @Stickshaker

        I fully agree, carbon will have to earn its place on the plane. Wings very possibly, fuselage debatable. Boeing have to bite the bullet and go for a market. The longer they wait the worse it looks going forward. So my advice to the top dogs is commit to do something, the small matter of what should become self evident as they iterate to what the market wants.

  8. Sure, I think airlines must be very interested, if only to see the kind of response from Airbus. Then they can play both to get some good deals!

  9. A 100% new model at $70 million… No chance it would EVER make money for Boeing, and they got the 787 to pay for still. They have to build it though – ouch.

    A322, with door 2 boarding [option], new wing with room for more fuel, gets airbus there sooner [post Boeing’s move], and sooner often makes it’s own market…. plus you got commonality, understanding, support, MRO etc. in you favor with a derivative.

    Looking forward to the a330neo getting into the air to see some real data. Maybe it’ll do better in SPC than advertised… may help it’s case going forward.

    • The 787 development costs are sunk, what’s important now is it is becoming cash positive on every unit produced bringing in much needed cash flow.

      • Bringing in cash flow for Boeing ? The suppliers may have some say about that, as only a small portion ( tail, rear fuselage) is made by Boeing itself.
        We arent privy to Boeings share of the selling price to know what portion is for Boeings account

  10. If there is a market and launching customers for 200-300 A322’s, Airbus willl launch it based on that.

    It makes little sense to wait for the competition if airlines and engine OE’s endorse the business case. Happened to the NEO.

    For European and Asian operators 4000NM would provide a lean platform to open up new routes, spokes, leisure flights and enhanced frequencies.

    Maybe w’ll hear more in Paris.

  11. What’s clear is that Boeing is going for the twin aisle and Airbus will go for the same single aisle with enhancements here and there. If Airbus decides to respond. I get that Leahy and Boeing’s lead marketing guy are going to say what suits them the most but I’m puzzled on how Airbus declared the A321 as the MOM aircraft aircraft and that they don’t need to respond. Fast forward to present day.

    The outcome of this is that Boeing will launch the MOM and make a splash with a few hundred orders. In the event Airbus comes out with the NEO plus plus², what’s stopping current carriers who have the LR and the A321 NEO from dropping the former and going with the plus plus²?!? Conversions happen all the time, I get that but add ons and new orders are better for the company’s bottom line.

    • Think Boeing’s predicament is which of the MoM’s first, 220 seats or 260 seats?

      If they do the 220 seater first it is heads-on with an A322 and/or A321XL (new wing) and leave the door open for Airbus with an A330-200 “Lite” in the upper-end.

      So its all or nothing?

      If they do the 260 seater first the A321/22’s will have it all for them self in the lower end and Airbus can undercut them in price with an A330-200 “Lite” in the upper-end.

      The logic for me will be is to do something with the 787 air frame and build an NSA, starting with an 757 equivalent in capacity (“A321.5”).

      If Boeing did a “proper” job with the MAX10 = MAX10+ that could have used GTF’s they wouldn’t have been in this situation?

        • I guess Boeing wants to “replace” the larger 737 (MAX10) market with the smaller of the MoM’s. If they do a MAX10+ with extended landing gear it will cannibalize the lower end of their potential MoM market.

          But they also may realize that a MAX10+ could not be good enough a competitor to the 321+/322?

          An 220 seat 2-3-2 elliptical all carbon fuselage MoM could on the other end be a handsome aircraft for the 200-240 seat market that could give the “A322” a very good run for its money?

          A larger MoM will also be more efficient than any potential offering from Airbus in the 240-280 seat sector.

          Boeing’s marketing angle will be the twin aisles, passenger comfort and cabin logistics advantages.

          Boeing also realize that Airbus won’t build a 220 seat narrow twin aisle and have the market for themselves. The current 180-200 seat single aisle market will grow into the 220+ seat MoM market.

          If Boeing decides to go for the MoM now they could have an all new 2-3-2 twin aisle and NSA in 10-15 years from now. That will put Airbus between the devil and deep blue water because what will they have in 10 years from now?

          An322 and 330–200 Lite variant?!!!

  12. Airbus has to figure out how big a wing to put on the A320 fuselage. 38m like the 757-300, 45m like the DC-8 62/63, or even a 50m wing?

  13. In a tie-in to the other post concerning Bombardier being a potential stalking horse for a dumping charge against Airbus, would this not actually backfire for Boeing? If they try to generate hundreds of early orders, like they did with the 787, would that not open a possible tit for tat dumping charge against them from the EU?

  14. This is Boeing’s problem and it started when they declined to replace the B737.

    They need to offer a competitor to the A321 which should outperform by at least 20% and be able to scale up and down in size.

  15. After months I can see that uncertainty is still rive on the MoM. In my mind an opportunity for Boeing has dawned on me. The 787 program seems to be getting on track and various rubicons crossed.

    A new generation medium haul (NGM) 787-family could be developed with significant cost and weight savings using a new wing, wing box, landing gear, new generation engines, etc. The development cost for the 787 has basically been done. This family could look like this;

    1) 787-8 (NGM) – 5500Nm – 240 seats (replacing the current 787-8),
    2) 787-9 (NGM) – 4500Nm – 280 seats (additional to the 787-9).

    The 787-8 will still be able to fly from LAX to LHR and 787-9NGM from Melbourne to Hong Kong. Both could however also be efficient on routes <2000Nm.

    Manufacturing and fleet commonalities will have significant benefits to Boeing and operators.

    This will put Boeing in a position to develop the NSA.

    • No way a 787 based MOM can get anywhere near the necessary weight savings. No chance. The 787 is much too capable in EVERY system, anythings would have to cahnge from the center wing box to the last – oversized – electric circuit. It never worked and it never will.

      The nearest option based on an existing plane would have been a 767Max with 8-abreast by lowering the main floor. Even that didn’t work.

      • Agree, a lot of things will have to change. Basically two new aircraft in some aspects but 100% similar in other build around the 787 fuselage.

        But what will the development cost/risk be relative to a MoM? The 787NGM will have production and fleet commonalities. Development time could also be significant less.

        The MoM will introduce a new fuselage size etc, is the market big enough to warrant it and a new production facilities? An 787NGM already have all the interior sorted out for example, from design to production, cockpit, seating, air conditioning etc.

        Airports and ground staff will be familiar will all aspects of the aircraft.

        The 787-NGM can be build alongside the current 787. An 787-8NGM could also be the basis for a freighter to replace the 767F? Volumes bring cost reductions which will benefit all.

      • Thanks Keesje, as mentioned I can see two aircraft in an NGM/(NMA) class, approximately 240 and 280 seats. It will take significant investment but almost cut out risk. Commonalities will have huge production and operator benefits.

        Commonality with current 787’s could be good for sales, not only for the NGM but also current 787’s. One airliner that could cover a lot of ground/”air”.

        1) 787- 8 NGM – 5500Nm – 240 (230) seats.
        2) 787- 9 NGM – 4500Nm – 280 (270) seats.
        3) 787-9 – 7500Nm – 280 seats.
        4) 797-10 – 6500Nm – 330 seats.

        A single 787-NGM/NMA somewhere in size between the -8/-9, with around 250/60 seats, might be an option (5000Nm).

        Of interest is that all destinations in Europe, Africa and most in Asia/Far East will be in reach from the Middle East with an aircraft of 5000Nm range.

        The larger of the NSA’s could service the 200-210 seat segment.

      • Thanks for the link. It’s interesting to note that the vast majority responding to your post didn’t seem to understand that a 360-370 m2 A330/787-sized wing is much heavier than a 219 m2 A310-sized wing — leading to optimised MLG, engines and a smaller horizontal stabiliser (etc.) — and therefore, what using an A310-sized wing would entail with respect to both OEW and MTOW for an A310-sized aircraft that’s based on the 787. “A310-sized”, though, should obviously mean “with respect to wing-size” and not body length. In fact, the body-length should be “A332/A338-sized”.

      • If you want a 787-8 to lose weight by 25-30t with ‘shrinks'[existing OEW is 120t].
        You can just substitute a 767-200 ,its OEW is in the right area, 80t.
        its got around 215 pass in 2 classes, 4000nm range ( which can go to 6500nm in a longer range version)

        Apart from having new engines ( which dont currently exist) this plane isnt going to work, and nor is your downsized 787-8

        • Realistically how long will it be before a new engine in the 40-50K-Lb class be available that have the benefits required for a MoM.

          The Trent7000 in theory should have been an easy one with R&R’s experience with the TrentTEN, but all you see is photos of now a six month old A330NEO that is being towed around. The tyres might need replacement before the engines are on the wing?

          There are GEn-1B “available” with thrust down to 57-K-Lb. Sure GE can tweak this to around 50-55K-Lb with a smaller fan and weight and cost saving for an 787-X lite? Then you will still have engine and engine management commonalities in the 787 fleet. An size between the -8 and -9 at around 250/260 seats is possibly the ideal?

          But an all new 2-3-2 is best on paper but a big investment risk. Many are promoting an “all Carbon” aircraft, but maybe it should follow the 777X formula and still use a conventional oval shape fuselage?

  16. I think this article makes my point very well.

    Airbus will respond with what it has and that’s not a bad thing, they still have that segment to themselves both price wise and capability wise

    Boeing has nothing so nothing to loose other than launch an all new single aisle and how much improvement can they get with an all new vs an upgraded wing on the A321 and even the A320?

    Longer term Boeing will come out with a 737 RS and restore that competition area, will Airbus try to do a 787 or is that market simply too small for two in that 767 replacing area?

    Often times two mfgs will do just that, ok, we give you that area and we have this area and call it a draw.

    Boeing probably has the advantage in there is more than enough sales for two in the A321 segment, be it current of the A31 Super + with a new wing and a bit of a fuselage stretch.

    New engines will be a coming.

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