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  • Boeing discusses 737RS future project strategy
    Posted by Guy Norris 6:09 PM on Feb 03, 2011

    Boeing Commercial Airplanes CEO Jim Albaugh has been discussing some product development ideas with company employees according to Flightblogger


    Reading the notes from the meeting seems to confirm some of the observations made in a recent report from Canadian investment bank RBC Capital Markets. See the story from Joe Anselmo and Michael Mecham here. Specifically, Boeing sees the clear threat which re-engining poses to the residual value of the current model.


    Yet, at the same time, with the competition from the A320NEO it acknowledges the need for further upgrades – which Jon’s blog indicates could start in the 2012 period and include 787-like flightdeck improvements, as well as additional engine upgrades.  

     

    Here are some of the cardinal points from the RBC Capital Markets:

     

    1. Lessors, which account for 20% of the 737 Next Gen backlog, “clearly prefer a new clean-sheet-of-paper 737, rather than a re-engined plane. Not only would a re-engined 737 lower the residual value on the popular 737NG variants, it would also make long term planning for lessors more difficult, given that the re-engined aircraft may have a shorter life span and may be less marketable. In the mean time, major lessors are keeping their options open with a few having scheduled deliveries in 2015 and beyond.”

     

    2. According to a survey of operators and owners conducted by RBC …  “more than half of the 737 customers favor waiting for a next generation narrow body solution from Boeing, rather than re-engining for several reasons. Customers want a step function increase in unit cost savings, unwilling to compromise for a paltry 2-4% savings from a re-engined aircraft. Moreover, many of Boeing’s 737NG customers are either low cost carriers that demand fleet simplicity, or carriers such as AMR that are using the 737-800 for replacement purposes.”

     

    3. The bottom line, according to the report is that “Boeing's customers support a new narrowbody: Our survey of  Boeing's major 737 customers has shown a resounding preference for a complete replacement of the 737NG with a new narrowbody aircraft, rather than a re-engined plane. If Boeing follows the pattern of the 787, and listens to what its customers actually want, then we expect to see a formal decision not to re-engine the 737 this summer, and then a formal launch of a 737 successor in the 2015-17 period, with an estimated entry into service in 2020-22.blog post photo
    The shape of things to come? One of Boeing's Model 765 future 737RS concept studies.  

    Tags: tw99, Boeing, 737, A320NEO

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