April 2, 2018, © Leeham News.: While Boeing edges toward a decision whether to launch the New Midrange Aircraft, the NMA or 797 as it’s known, Airbus ponders how to respond—either pre-emptively or after Boeing’s move.
Responding with an A321neo Plus is widely known, but it’s also logical the Airbus would look at enhancements for the A320neo. Less likely but probably studied are also enhancements to the A319neo. Studies, after all, pre-date the agreement last fall with Bombardier to acquire 50.01% of the C Series program and Airbus clearly understood that the present A319neo is as unattractive as was the original design of the Boeing 737-7.
Boeing, of course, modified the 737-7 to add two rows of seats and make it a straight-forward shrink of the 737-8.
The “737-7.5,” as Jon Ostrower famously dubbed it, puts the A319neo at a further disadvantage. With the CS300, the A319neo is the proverbial dead man walking.
Stretching the A321 and A320 has been fodder for the Internet airplane enthusiasts for years. A stretch of the A319 could also be undertaken.
Stretching the A319 and A320 would only match the 737-7 and 737-8, but along with aerodynamic improvements would certainly match or maybe slightly exceed the Boeings in economy.
An A321neo Plus—a modest stretch, more powerful engines, more range and aerodynamic improvements, however, would really put the 737-9/10 away. There’s room left for one more round of A320 enhancements; there’s no more room for any more 737 models.
As it is, the stats clearly show how Airbus’ single aisle airplane has overtaken the 737.
Despite a 20-year head start with the 737, through February Airbus has sold nearly as many A320s. There are more A320s in services than 737s.
(March data was not available as this was written. “A320s” in this context refers to all family members.)
Boeing leads in 737s delivered, by a wide margin, as you would expect from a 20-year head start. The 10,000th 737 was just produced, for Southwest Airlines.
Preoccupied as it is with the NMA, with the MAX only entering service last year and a backlog of more than 4,000 orders to fill, Boeing has a successful program. It’s not going to proceed with a 737 replacement any time soon.
Boeing needs to get its return on investment on the 737. It’s the 737 and at long last, the 787, that will provide the cash flow necessary to support the company during the transition from the 777 Classic to the 777X and development of the NMA.
But Boeing needs to replace the 737, with a program launch next decade. The old workhorse is on its last iteration and, like it or not, Airbus is and will continue to dominate the single-aisle market. When the new entrants are considered, Boeing has a mere 37% of the single-aisle market share.
The chess game between Airbus and Boeing is what makes this business so interesting.
If Airbus launches the A321 Plus alone, what will the affect be on the smaller version of the NMA, the “797-6”? Our analysis shows the economics will be about the same and the A321 Plus will have a much lower capital cost.
What happens if Airbus also launches an A320 Plus and even an A319 Plus? These will put more pressure on the 737-7 and 737-8. Would Boeing then be compelled to launch a 737 replacement before it wants to?
With the Farnborough Air Show coming up, eyes will be on both companies to see what they do. No launch of the 797 is expected this soon—Authority to Offer is more likely in the fourth quarter and a program launch next year, according to our information.
But will Airbus pull the trigger on a preemptive strike and launch the A321 Plus? There are those who think it should—the business case for the NMA, already in doubt for many, would become harder to close. Would it be enough to scare Boeing off the airplane entirely?
Airbus would certainly like to see that, for it has no airplane to serve the upper end of the Middle of the Market sector (the A330-800 is far too much airplane) and doesn’t want to be forced into creating one.