During the Boeing 1Q2012 earnings call, CEO Jim McNerney had this to say about the story that won’t die (that Boeing continues to look at the PW Geared Turbo Fan for the 737 MAX):
The gear turbo fan, the — yes. The — right now, as I think we’ve announced many, many times, we are working exclusively with CFM on the MAX, and we’re very happy with the development there. We’re confident that we can meet the targets that our customers need and that we’ve promised them. So that’s our plan going forward.
“Right now.” Was this a Freudian slip or an inconsequential choice of words?
Boeing likes American Airlines as stand-alone: McNerney also said Boeing prefers AA to emerge from bankruptcy as a stand-alone airline. This is no shock; the US Airways management is exclusively Airbus, and while American strayed from Boeing last year, it still placed a large order for 737NGs/737 MAXes.
McNerney talks about pricing: I think the summary on pricing is 777 steady, steady as she goes, capturing value, in many ways a uniquely positioned airplane today and significant productivity associated both with better conversion and with taking up rate. So the margin environment there, I would say, is good and favorable going forward. 37, all of the comments I just made on productivity apply. Significant productivity, both absorption kind of productivity due to increased rate as well as conversion productivity per unit. Slightly more aggressive pricing environment due to the introduction of the MAX and the NEO. So there’s launch customer kinds of pricing that have happened in a few cases. But I think at the end of the day, the — we anticipate about half of that market, which is a big number. And we see a pricing environment that’s not too different than the pricing environment we’ve had historically after we get through some of the launch customer — loss — launch customer pricing, which is part and parcel with our business.
[Source for all the quotations: Seeking Alpha Transcripts.]
We are hearing there essentially is a price war going on right now between Airbus and Boeing for single aisles, as Boeing attempts to stem the inroads and success by Airbus with the A320neo. In this case, we’re hearing Boeing is the aggressor (which follows, since it is playing catch-up).
Boeing won Delta Air Lines on the 737-900ER v A321 competition largely on price, we understand–bidding 10% lower than Airbus. We also believe price is likely the determining factor in the soon-to-be-completed United Airlines deal, where Boeing is widely reported to now be the favorite.
