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Boeing Said to Mull Stretching 737 to Counter Airbus A321neo

Sept. 9, 2016
The more straightforward redesign, which would rely on upgrading engines developed for the Max family, would enter the market by early 2020.

Boeing Co. is studying two designs for its so-called Max 10, a potential stretch of its largest 737 aimed at making up ground on Airbus Group SE’s longest single-aisle jet, according to people familiar with the plans.

One option Boeing (IW 500/9) has discussed with airlines and lessors in recent weeks is a simple lengthening of the 737 Max 9 that would offer much of the range and payload of Airbus’s A321neo, said the people, who asked not to be identified because the talks are private. The company is also vetting an alternative, more elaborate revamp that would feature the larger engines developed for the Airbus jet.

The more straightforward redesign, which would rely on upgrading engines developed for the Max family, would enter the market by early 2020, while the more complex one wouldn’t begin service until almost two years later. Airbus, meanwhile, has already received almost 1,300 orders for the A321neo, with a long-range version scheduled to begin commercial operation in 2019.

Boeing definitely needs to do something."

— Dimitroff, head of valuations, Flightglobal’s Ascend Consultancy

“Boeing definitely needs to do something,” said George Dimitroff, head of valuations for Flightglobal’s Ascend Consultancy. “The market wants a choice, not an Airbus monopoly, so they can continue to have access to competitive pricing.”

Chicago-based Boeing has struggled for years to find an answer to the A321, and the quandary has grown this decade as the out-of-production 757 has started to fade from airline fleets. Airbus redesigned its largest narrow-body to cruise seven hours from Europe to North America, or cram in as many as 240 people. Its versatility is a crucial reason why the A320 family has outsold the 737, Boeing’s biggest source of profit, by about 1,000 orders, according to Bloomberg Intelligence.

Eroding Market Share at the Top

Both planemakers have benefited as low-cost carriers gravitate to larger narrow-body aircraft to keep pace with capacity growth. The most popular market segment remains the 160-seat sector served by Boeing’s 737-8 and its midsize Airbus counterpart. But A321neo sales have surged over the last two years, increasing the pressure on Boeing to address its eroding market share at the top of the narrow-body market.

“We continue to look at the higher end of the Max family,” Doug Alder, a spokesman for Boeing, said in an e-mail. “The needs of our airline customers as well as the business case will drive our decision and timing.”

The manufacturer declined to elaborate on the latest studies for a larger 737. The board must sign off on any new variant before the company can formally market the plane to customers.

Airbus' Extra Eight Feet

Airbus has a size advantage and operating economics advantage because the A321 can squeeze more travelers into a frame that is eight feet (2.4 meters) longer than the Max 9, which is scheduled to enter service in 2018.

The challenge in extending the 737’s fuselage lies in overcoming the limits of a design dating to the 1960s: The plane has smaller turbines than the A321neo because it rides closer to the ground when on the tarmac. But any redesign can’t be so expensive and difficult to manufacture that it bogs down production of the 737.

It’s not the monumental engineering challenge that people assume."

— Mike Delaney, Boeing vice president of airplane development

“This is not a trivial stretch because it will require increasing engine thrust and changing the landing gear,” Douglas Harned, an analyst at Sanford C. Bernstein & Co., said of the Max 10 in a Sept. 6 report. “While this would be much less expensive than a new airplane or a major new derivative, it is still a significant modification. It is unclear if the payback would be there.”

As the first 737 Max 8 jets glide through flight-testing ahead of a 2017 debut, Boeing and engine-maker CFM have gained confidence that they can reap enough extra thrust from the plane’s existing Leap-1B engines to speed to market a new, longer variant with relatively uncomplicated landing gear, the people said. Jamie Jewell, a spokeswoman for CFM, a joint venture between General Electric Co. and Safran SA, declined to comment.

Boeing's Manufacturing Riddle

Boeing is also convinced it has solved the manufacturing riddle for a more elaborate design if customers prefer the range and payload gains possible with the larger Leap-1A engines designed for the A320 family. That model would need some modifications to the wing and tail, and taller landing gear that would mechanically shrink to fit into the same wheel well used on other 737s.

“It’s not the monumental engineering challenge that people assume,” Mike Delaney, Boeing’s vice president of airplane development, said of the Max 10 options in an interview at the Farnborough Air Show in July.

Air Lease Corp. has been among the customers prodding Boeing to act. During an Aug. 4 earnings call, Air Lease founder Steven Udvar-Hazy and Chief Executive John Plueger said Boeing was formulating a two-pronged strategy in which the Max 10 would be followed a half-decade later by an all-new design, a middle-of-market aircraft to bridge the divide between narrow- and wide-body jets.

While Boeing had penciled in a commercial debut for the Max 10 in late 2021, “that’s just too late,” Plueger said. “I believe they’re looking at moving that up meaningfully. But if you’re going to do a one-two punch, you’ve got to do a one-two timely, especially the one part.”

By Julie Johnsson

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