02 June 2011

Facing Tough Choices - Boeing Many Need To Go for 737 1/2R

Boeing's CEO was pretty adamant that there will be no public pronouncements of a next gen 737 at the upcoming Paris Air Show next week. However Bernstein Research is reporting that Boeing may have to go for a 737 point upgrade which I am calling the 747 1/2R - to be competitive in the coming few years.

This is not a trivial matter. AS I have written previously the 737 is too low on the ground and will need some major rework to accommodate the much wider chord next gen engines. Thus the cost upgrade to a 737 will be significant and still may not yield an aircraft in a near enough time frame. Airbus has advanced the A320NEO EIS date to 2015. For Boeing to do such a half job - it will need to work hard to meet that date with a 737NEO type project.

There will be some triggers to this - Boeing probably wont like to gave to compete with two players and it continues to offer an older model product. Surprisingly the number of mixed Boeing/Airbus fleets has grown in recent years so there is little brand allegiance. We have many fleets which have A330s and 777s. We also have fleets with mixed 737/A320s in them.

Boeing has recently made a big deal over the Sky Interior with the special lighting. Something that Virgin America and other A320 operators have known about for years. And as a personal note - having flown on both - they really do calm you down. The experience is well worth the extra 100K per aircraft that I believe Boeing is charging.

Of course allowing me to speculate - what if Mr O'Leary really does do the dead and buys one of the new planes. It could really hurt Boeing's business not just for the size of the order (reportedly in the 300 plane number) but also in the halo effect. With Airbus reportedly having won the Delta narrow body fleet replacement battle. There must be a lot of midnight oil burning going on in Chicago and Renton

A story that will run for a bit I suspect.


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