Boeing’s longest 737 Max can’t debut soon enough for one buyer
- Speeding up plans to cut emissions may save 153 million lives, says study
- Can hashgraph unseat blockchain as the favoured tech for cryptocurrencies?
- FDA-like agency needed for agriculture: commerce ministry
- Raju Shetti offers support to Congress over farmers’ issues
- Pharma firms under scanner for selling drugs without safety trials
Chicago: Boeing Co. is nearing a decision to build a longer 737 Max targeted for trips from Boston to Los Angeles—and fill a gap in its product portfolio that Airbus Group SE is exploiting as it racks up order after order for its A321neo.
For one key customer, Air Lease Corp., Boeing’s newest single-aisle plane can’t come soon enough.
“We’ve recommended 2019,” John Plueger, chief executive officer of the Los Angeles-based lessor, said in an interview. That’s a year ahead of Boeing’s schedule for the Max 10X’s planned debut. “It would have been better to get the first airplane in March 2019, but I don’t think that’s possible,” he said.
Boeing is in intense discussions with airlines and lessors for the Max 10X and has “extended business offers” to some potential buyers as it builds a case for the narrow-body jet, Randy Tinseth, a Boeing vice president of marketing, said Tuesday as he provided the first view of the aircraft model at the Istat Americas annual conference in San Diego. The decision on when to launch the plane is expected this year.
Timing and price are two of the critical elements that Boeing must consider in its high-stakes chess match with Airbus for dominance of the single-aisle market. The 737 and A320 family aircraft, long favoured by budget carriers, are the largest source of profit for the aerospace titans. Billions of dollars of investment are at stake, and the payoff can be thwarted by factors ranging from cheap oil to supplier stumbles.
Air Lease, an influential lessor with a track record of shaping Boeing and Airbus product decisions, is getting antsy. While Boeing figures out its product strategy, Airbus’s A321neo is grabbing orders from customers like Delta Air Lines Inc. for transcontinental flying once handled by Boeing’s out-of-production 757.
“It’s getting a very late start,” said Plueger, who co-founded Air Lease with Steven Udvar-Hazy, nicknamed the “godfather” of aircraft leasing for his role in founding the industry. “The timing is really key here.”
The newest member of the 737 Max family, the 10X, would seat 230 people in a single-cabin design and debut less than a year after Airbus introduces an A321neo model whose doors are reconfigured to seat as many as 240 people, Tinseth said in an interview. Boeing sees an opportunity to market to operators of the 737-800 as about 4,000 of the jets retire over the next decade.
The MAX 10X is a relatively minor upgrade that would offer similar capacity, and 5% lower per-seat costs and 5% lower per-trip costs than the A321neo, Tinseth said. With a few tweaks to its door design, the cabin length could come within 15 inches of its larger Airbus rival. “We match their revenue at a lower cost,” he said. “It’s a great place to be.”
Airbus sales chief John Leahy was dismissive of the Boeing product. “They are spending money to improve a product but not be equal to us. So you’d say, ‘Well why would I buy that?”’ he said in an interview.
Even so, the European planemaker is “looking at further slight improvements in fuel consumption and range,” of the A321, Leahy said, including small “clean-ups” of the A321 wing design. “There is always the possibility of trying to get an extra seat row in,” Leahy said. “A lot depends on what they decide to do with the 737 Max 10.”
While Airbus has grabbed the bulk of single-aisle sales since introducing a more efficient version of the A320 in late 2010, it has also faced delays and angry customers as United Technologies Corp.’s Pratt & Whitney division struggles to ramp up production of a new engine tailored for the A320neo family, which began commercial flights last year.
The engine-maker recently acknowledged some durability issues affecting the geared turbofan, including a combustor liner that is degrading faster than anticipated in harsh environments. Pratt is also working with a supplier to resolve premature failures of an oil seal, which should be fixed by May, Gregory Hayes, chief executive officer of parent United Technologies, said on the most-recent quarterly earnings conference call.
Air Lease expects to take delivery of eight Pratt-powered A320neo aircraft this year, Plueger said. But operators are asking Pratt to provide a greater number of spare engines as insurance, putting more pressure on the division. The challenge: “Meet the revised quantity they have agreed to provide Airbus, but also ramping up so they have enough spare engines to cover the installed fleet,” he said.
While Pratt’s industrial performance has been “disappointing,” the geared technology in the new engine is performing well, Leahy said. “It’s just some small, painful problems that I’m sure they’ll get behind them in the industrialization of the program,” he said. Bloomberg