The order, which is believed to be for up to 400 single-aisle aircraft, is likely to be shared between Boeing and Airbus. The split gives Airbus an "in" at American, ending Boeing's monopoly with the airline. To keep its share of orders, Boeing offered American an upgraded version of its 737 -- a version that hasn't been approved by its board, the Wall Street Journal reported.
Analyst Scott Hamilton, with Leeham Co., suggested that Boeing will log the orders for its existing 737 but will give American the option to convert to an updated version of the 737 once Boeing's board gives the OK on that re-engined plane in August.
The Chicago-based jet maker has been contemplating whether to re-engine its Renton-built 737 or to come out with an all-new replacement. Hamilton believes Boeing will do both. He suggests Boeing will offer the updated, re-engined 737, which would be delivered in 2017, and a completely new plane, which will be introduced in 2021.
Airbus began offering its A320 new engine option jet late last year and already has received more than 1,000 orders and commitments. About 667 requests for the updated jet were placed at the Paris Air Show last month. Airbus' success in Paris should have prompted Boeing to quickly re-engine the 737, noted Richard Aboulafia, analyst with the Teal Group, in an update Tuesday.
Boeing officials previously have said they were leaning toward an all-new 737, based on customer feedback. However, Aboulafia has long suggested that Boeing can't afford to wait for new technology to become available for a new jet.
U.S.-based airlines will look to replace their older planes soon, given that American will be able to offer passengers lower fares if it operates more fuel-efficient jets like the A320 neo, Aboulafia wrote. Waiting in the wings to order new aircraft are Delta and Southwest Airlines among other U.S. based carriers. Southwest operates an all-Boeing fleet of single-aisle jets, putting pressure on Boeing to keep the carrier happy.
A decision to re-engine the 737 would be good news for Boeing workers in the Puget Sound region, given the company would likely keep work for the updated 737 at Renton. Boeing officials have said they'll open up work on a 737 replacement aircraft to other locations.
Earlier this year, Gov. Chris Gregoire launched an effort to keep work on Boeing's next all-new jet in Washington, but not necessarily in the Puget Sound region.