Boeing Moves Further Away From Re-Engining
New Design On The Horizon?
What Will Airbus Do?
Will they, won’t they?
With Boeing’s plate rather full with the 747-8 and 787 programs, both of which are entering their production phases, has the time come for the company to finally make a move on replacing the Next Generation 737?
“I can tell you right now our customers haven’t shown a real interest in a re-engined airplane.”
Austrian Airlines Boeing 737-800 descends into London Heathrow Airport
Image copyright/owned by FleetBuzz Editorial.com
Those were the words from Boeing’s CFO, James Bell who was speaking at the Morgan Stanley Unplugged Conference in New York yesterday, giving further food for thought on Boeing’s continued studies on what, if anything, it will do in relation to updating, replacing or doing nothing to the 737 family.
The biggest challenge, aside from trying to fix the problems associated with the 747-8F and 787-8 programs is timing any decision on the 737 family.
With the CFM56-7BE engine due to enter service next year, Bell was quick to quash the oft-talked about double-digit fuel burn savings from newer generation engines like the LEAP-X, instead stating that “single-digits” would not be enough to satisfy customers.
“Its not flow-through efficiency. It loos more like a single digit improvement which we don’t believe is something that our customers are interested in and go into a re-engining and have a mixed fleet for just that minimal improvement and performance,” said Bell.
“We’ll know [by year end] where we are, we’ll have gotten through all of our customer discussions and we’ll have gotten through all our analysis as to, you know, exactly what improved performance we can deliver through that approach. And if it’s not enough that where a business case closes then obviously we’re just not gonna do it [re-engining],” he added.
The other big driver in the decision making process is what Airbus does. As expected, the A320 is likely to benefit from both the all-new LEAP-X engine and the GTF engine (a fourth version of which would not be produced until 2016 or 17 at the earliest).
Airbus is pinning a lot of hopes on Boeing following its lead with a re-engined A320. Based on Bell’s comments, Airbus could well be in for a huge disappointment on two fronts.
If Boeing opts to forego or even go down the clean sheet 737X route, Airbus will be lumbered with a costly re-engine program with a very short shelf life with virtually no possibility of turning profitable.
Further, the European airframer would have little choice but to follow Boeing’s lead with an all new airplane – with the A400M and A380 still sapping money and resources away from the A350XWB, itself on the verge of a major delay, funding any new replacement A320 will be extremely difficult, made harder by the WTO ruling which all but rules out further state aid. Equally interesting is where Airbus sees market value in re-engining the A320 if Boeing is reading a different script.
It is highly unlikely that the A320 would achieve double-digit fuel savings with its older, less structurally efficient wing designed thirty years ago if the current 737 (with a much newer and efficient wing) can’t do it – airlines would be more inclined to line up for something all new which offers greater all round benefits during commercial service.
With that in mind, if Boeing elects to launch a new narrowbody, it can ill-afford to squander its competitive advantage. It has less capital exposure risk than Airbus and parent EADS and has a healthier cash balance, despite the troubles on the 787.
Could the bigger risk be not launching something new?
As the last 20-odd weeks of the year whittle down, it won’t be long before we know which way Boeing and the 737 are headed.
