Fires the First Shot in the New A320/737 War with Boeing -
part 4 of 4
Boeing's Big Problems
The original 737-100,
which first took to the skies in early 1967.
Part 4 of
a series on the needed evolution of the Airbus/Boeing
A320/737 aircraft. Click the links at the bottom to read
through the other three articles in the series.
Boeing has been understandably
slow to proceed with replacing its spectacularly successful 737
family of planes, a plane that dates back over 40 years.
But unfortunate timing and
external factors are now squeezing Boeing in unexpected ways,
resulting in it having no easy or good choices for how to
respond to Airbus, just a series of successfully worse and worse
It will be very interesting to
see how the airplane manufacturing industry reshapes itself due
to the changes in the former Boeing/Airbus 737/A320 duopoly, one
which is unlikely to last much longer.
Boeing's one time unquestioned
primacy - something far from clear these days anyway - is being
challenged as never before.
Airbus can freely choose
either to re-engine its A320 family or to design an entire new
family of aircraft.
Boeing can't do this quite
so readily, because its 737s have less clearance between the
engines and the ground.
A new engine design would
almost certainly involve a larger diameter, and therefore, would
place the engine closer to the ground. This is okay with
an A320 type plane, but not okay for a 737 type plane.
If Boeing is to simply
re-engine its 737s, it will also need major modifications to its
undercarriage to lift the plane higher off the ground (without
making the plane become unstable as a result). This adds
further lead time, cost and complexity to the project.
Boeing's 737 is also a more
highly 'tweaked' airframe already. It has gone through
several design changes over its 40 year life, and it is already
near maxed-out in terms of performance potential.
Airbus Makes the First Move
And so, after many years of
staring each other down, Airbus has become the first company to
announce its plan for an upgrade to its current A320 series of
After dropping hints earlier
in the year, in early December 2010, Airbus said that it will
re-engine the A320, offering two new engine alternatives, one
from Pratt & Whitney, the other from CFM.
The new plane is designated
the A320neo - with 'neo' standing for 'new engine option'.
The cost to Airbus is
expected to be about €1 billion ($1.35 billion), and Airbus say
that with the new engines, the A320neo will be about 15% more
economical to operate.
The more efficient engines
also mean the plane will be able to either fly further (almost
600 miles more range) or carry more payload (about 2.2 tons of
Airbus expects the new plane
to be in service in 2016, and says this will extend the overall
life of the A320 series through until about 2025 - nicely timed
to segue in to the new open rotor engines expected to be
What Can Boeing Do
Boeing has said it is not
considering re-engineering the 737 (without actually saying that
the main reason for not doing this is due to insufficient ground
clearance and the problems associated with it).
So what can it do instead?
Rush to develop an entirely new plane, using today's best
practices for composite material construction? If it does
this, it would be able to get the plane to market perhaps some
time towards the end of the 2010's - 2018 or 2019, assuming that
it manages the development process better than it has the 787
Such a new plane would
definitely equal and possibly beat the A320neo series, and would
therefore accelerate Airbus' need to come up with a complete new
But Airbus could choose to
start development on the complete new plane a year or two
subsequent to Boeing's start, and so it could adopt improved
composite technologies, and come out with a newer plane that
would beat Boeing's 737 replacement, causing Boeing to have to
then develop yet another series of planes, making use of what
may have then become a more stable and less rapidly changing set
of composite manufacturing techniques.
This would be a nightmare
scenario for Boeing.
Airbus is hoping to do only
one complete rework of the A320 series - in time for the open
rotor engines in about 2025. Boeing is trying to work out
what it can do to avoid having to do two reworkings.
Alternatively, Boeing can
sit tight for a year or two, and thank its lucky stars for loyal
airline customers such as Southwest, and hope it can continue to
pick up some sales, and then develop a 737 successor once it has
a better knowledge of the new composite materials.
Boeing might also think it
better to discount planes by some millions of dollars a piece.
A 737 currently lists in the $50 - $90 million price range (list
prices are typically discounted by 20% up to 35%). If
Boeing can save itself $5 billion or more by not developing any
sort of 737 upgrade/replacement, maybe it could afford to
discount up to 1,000 737s by $5 million each so as to compensate
for the the superiority of an A320neo over a 737.
Did Boeing Cause its Own
If Boeing had decided to
replace its 737 series of planes five or ten years ago, it
wouldn't now be faced with the difficult quandary of how to
upgrade the plane only once rather than twice in the next
Instead, it would have added
a great deal of pressure to Airbus at a time when Airbus was
very vulnerable and overcommitted, and might have caused Airbus
to take the 'easy way out' by re-engining the A320 series,
giving Boeing a lead and a longer pay back for its replacement
to the 737, putting Airbus on the back foot.
But instead Boeing did
nothing, and now it finds itself having painted itself into a
corner, with no good choices at all, only a series of bad ones.
Boeing's Best Bet?
Maybe Boeing's best bet is
to do little for now, while stealthily progressing a new
airframe design as best it can, so that when it has the
technologies able to put the projected design into reality, it
can do so in a shorter lead time.
Boeing currently has an
order backlog of about 2100 737s, which represents almost six
years of production. In other words, it is currently (more
or less) taking orders for delivery in 2016 and beyond.
If it can keep its backlog
full, it could also offer airlines an upgrade/conversion option,
and priority places in line for any 737 successor model it
builds, giving airlines a 'best of both worlds' reason to stay
loyal to Boeing.
This would be difficult to
finesse, however, because once it announces its successor plane
series, there is a danger that most of its forward orders for
the 737 would switch to the new plane, causing a collapse in 737
demand and raising the specter of some years where no-one wants
to accept 737s but the the new model plane is not yet ready for
Boeing doesn't really have a
best bet at all, and maybe it needs to 'bite the bullet' and
spend extra money to upgrade the current 737 as best it can to
allow for larger engines.
Boeing very neatly snookered
Airbus when it deployed its 787 and Airbus made two mistakes in
responding to it - first by doing nothing, and second by coming
up with an inadequate design of plane. Airlines ordered
787s by the hundred while all Airbus could do was helplessly
watch until finally coming up with a credible design in 2007, by
which time Boeing had collected almost 700 orders for the 787.
But Boeing now risks being
in the same situation Airbus was, with the vital 737 series.
Twenty Planes a Week
Airbus made its announcement
on 1 December, just over three weeks ago. So far, Boeing
has not made any credible response. While three weeks is
nothing substantial at the glacial pace of airplane development,
it is still 1% of the total leadtime between the Airbus
announcement and the first commercial flight of the new A320neo.
Furthermore, with 737/A320
(and C-919 and MS-21 and CS300) sales proceeding at a rate of
about 20 orders every week, sooner or later Boeing is going to
find itself behind the curve for - thus far - 60 plane orders.
And each successive week
Boeing does nothing will mean, sooner or later, another 20 plane
sales that Boeing will have to struggle harder (ie discount
more) to have any chance of winning any part of.
So - what's it to be,
This is part 4 of a
series on the needed evolution of the Airbus/Boeing A320/737
aircraft. Please see also the other parts of this series :
The vital importance - and growing
problems - of the A320 and 737 families of airplanes
2. Why Airbus and Boeing
don't want to - but must - update their aging airplane series
3. Engine issues and what
Airbus and Boeing could do
4. Boeing's big problems
If you liked this, you might also enjoy our multi-part series 'Where
is Boeing Going'.
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24 Dec 2010, last update
25 Aug 2018
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