Boeing Bears Down On 737 Fuel-Savings Target

April 11, 2012

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Boeing on Wednesday put the finishing touches on a make-over of its popular 737 aircraft as the plane maker battles with Airbus to deliver fuel savings to airlines hammered by near-record oil prices.

The company unveiled several design choices meant to lower weight and wind-resistance for its upcoming 737 MAX. Among other determinations, Boeing said it has decided on an 8-inch nose gear extension to give ground clearance for a larger engine fan.

Airbus and Boeing are revamping their workhorse models with bigger engines to offer double-digit percentage fuel savings in one of the most competitive market battles of the last two decades, affecting a vital source of cash generation at both companies.

"My feeling about it is what they're saying is plausible. And I'll just wait until we see the results," said Hans Weber, president of Tecop International, a technology management consultancy, referring to the Boeing decisions.

Boeing last year unveiled plans to put new engines on its existing 737 design, providing fuel savings of up to 12 percent over the current 737. Boeing named the aircraft the MAX and said it would enter service in 2017.

Weber said the announcements shed light on the MAX and give clarity to the design direction. He said he did not expect the decisions to add to the undisclosed cost of the MAX.

Boeing said it would improve the aircraft's aerodynamics by extending the tail cone, update its flight controls and strengthen landing gear, wings and the fuselage to accommodate the weight of the larger engines. Boeing said the decisions were within the scope of the original design goals.

In its 40-year history, the Boeing 737 has become the world's most-sold aircraft and the backbone of airline fleets worldwide. But Boeing has taken several months to complete the design of the upgraded 737 MAX while juggling engineering considerations, market opportunities and costs.

The plane will compete with the Airbus A320neo, which also will feature new engines and offer fuel savings of 15 percent over the current A320.

MONTHS OF DEBATE

Wednesday's announcement was the result of months of debate over engine improvements and aircraft design that caused a convulsion in the USD$100 billion airliner industry, with airlines and aerospace investors waiting nervously for updates on normally obscure decisions.

Engineering experts say Boeing's response was hampered by the fact that there was comparatively little space to place the bigger and more efficient engines under the wing of the 737, which was initially designed low to the ground to speed up baggage loading by hand and quicken aircraft turnaround times.

To fit inside the available space, the current engines already have a squashed appearance underneath to give the engine housing adequate ground clearance.

The MAX will be powered by engines made by CFM International, a joint venture between General Electric and Safran.

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

Boeing slumped to its lowest market share in the history of its four-decade rivalry with Airbus -- 36 percent of new plane sales -- in 2011 after Airbus stacked up record sales of its revamped A320neo.

Now the Chicago-based company is hitting back with strong sales of its own redesigned narrow-body and aims to turn the order race on its head in 2012.

(Reuters)