Boeing Committed To MAX For Long Term

March 20, 2012

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Boeing's upcoming 737 MAX is not a bridge to a new small plane, and the US plane maker intends to make the updated version of its best-selling 737 narrow-body for as long as customers buy it, a senior Boeing executive said.

Speaking at a conference, Mike Bair, senior vice president of marketing for Boeing commercial planes, shrugged off speculation that the upcoming MAX is simply a place-holder for a new plane.

"Our intent is that we build the MAX until the market doesn't want to buy any more," Bair said.

Boeing lost the 2011 order race by a wide margin and lagged Airbus on deliveries for the ninth year in a row, but the company has vowed to fight back in 2012. The MAX is key to that fight.

Boeing last year unveiled plans to put new fuel-efficient engines in its existing 737 design under pressure from its European rival, which had already begun taking massive orders for a re-engined version of its competing narrow-body A320.

Boeing named its aircraft the MAX and said it would enter service in 2017. The MAX, which offers fuel savings of up to 12 percent over the current 737, will be powered by engines made by CFM International.

The Airbus upgrade, known as the neo, is set to enter service in 2015. The neo offers fuel savings of 15 percent over the current A320.

Prior to announcing the MAX, Boeing had been leaning toward a complete redesign of its narrow body, a step it said would have produced even greater fuel efficiency than the MAX. But talk still reverberated throughout the industry that Boeing had not quite abandoned its desire to start with a fresh design.

Bair said that once Boeing decided to re-engine -- and not redesign -- the 737, it was committed to producing the plane for the long term.

"We don't know when that's going to be," he said. "I wouldn't predict 2025 or 2035. At some point, either something better will come along, or the marketplace will decide it won't continue to take it."

Boeing has taken more than 1,000 orders for the MAX since winning its first provisional order for the plane from AMR's American Airlines last year. Southwest Airlines will be the first operator of the plane.

Meanwhile, Airbus said it raised the list price of its neo this year because of rising fuel prices and the popularity of the plane, which has garnered more than 1,200 orders since Airbus announced the launch.

Andrew Shankland, senior vice president of leasing markets at Airbus, also said at the conference the company was not permitting customers who had an original A320 plane on order to convert it to a neo.

He said Bombardier, which hopes to make inroads into the narrow-body market with its C-series plane, and other new entrants face high barriers in the segment because of the way airlines view their fleets.

"If somebody has 100 A320s or 100 737-NGs (Next Generation) in service, and if they want to take 20 or 30 airplanes, it's a much easier decision for them to take more CEOs (current engine options) or more neos and a much harder one to move away from the family commonality and to take another completely different airplane," Shankland said.

(Reuters)