Jan. 14, 2019, © Leeham Co.: Two thousand nineteen begins with increasing focus on whether Boeing is going to launch the New Midmarket Aircraft (NMA, aka 797).
Signs all point to a program launch, perhaps at the Paris Air Show. Authority to Offer (ATO) the airplane for sale is expected by March or April.
Engine companies were asked to respond to Requests for Proposals by the end of December. Engine down select is expected soon.
LNC’s Dan Catchpole will be reporting on this process soon.
More signs that Boeing is going to launch the NMA comes in the form of several new job postings.
Just before Christmas, Boeing posted job openings for a Mid-Level, Guidance Navigation & Control Engineer, a Guidance Navigation & Control Engineer. Just after the new year, Boeing Global Services posted a job listing for a Senior Product Marketing Specialist New Mid-Market Airplane.
The first two positions, at Boeing Commercial Airplanes, were in the NMA program. BGS’ job posting included the caveat “if [the program is] launched,” the position’s “Principal responsibilities will be to develop and implement a marketing plan for services for the NMA.”
The BCA postings were subtle. Well down the listings, BCA only wrote that the positions were in the “VP/GM NMA program office.”
These listings followed several others that were posted in the second half of 2018.
It’s always possible these people could be assigned to other programs should Boeing not launch the NMA. There’s one Wall Street analyst who is basically convinced that the NMA won’t be launched and Boeing will go straight to a 737 replacement. He cites the fact that the MAX 9 and MAX 10 simply don’t compete well against the Airbus A321neo and Boeing’s market share continues to erode as a result.
While a I agree with the second sentence, I don’t think Boeing is remotely ready to launch a successor to the 737. Operators of the 737NG have only order half the replacements needed. This gives plenty of room for more MAX orders.
The MAX is Boeing’s cash cow and money-maker. The 787 is now throwing off cash, but it still has more than $25bn in deferred costs to burn off—something that won’t be complete until line 1,400+ (Boeing last year delivered line number 787).
With the 777 program in transition and the 747 barely hanging on, Boeing shouldn’t futz with the MAX at this time, or any time in the near-term. The day a replacement program is launched is the day sales begin to fall off.
Although the 737 is now #2 in a duopoly, the order growth potential is greater than for Airbus and the A320neo. About 80% of the ceo operators ordered the neo. Unless Airbus flips a lot of 737 operators, Boeing’s lagging market share is likely to largely catch up over the coming years.
This is one reason why Airbus wants to increase production of the A320. It’s ahead of Boeing already, even if deliveries are about the same due to supplier problems.
I don’t look for a 737 replacement program to be launched until around 2025, plus or minus a year.
The next 2 ½-3 months will be key to watch for the NMA launch.
The engine down select will be crucial.
If Boeing’s board gives ATO, this is tantamount to launching the program. The formality would be the Paris Air Show.