Boeing launches updated 737 with commitments for 496 jets

The Boeing Co. launched its answer on Tuesday to rival Airbus' small jet challenge with the 737 MAX, a jet that already has 496 tentative orders.

Boeing has dubbed its jet the 737 MAX because the jet “will deliver maximum efficiency, maximum reliability,” Nicole Piasecki, Boeing's vice president of business development and strategic integration, said Tuesday.

Boeing said its board had approved a plan to put newer, more fuel-efficient engines on its popular 737. The move comes eight months after Airbus launched its A320 New Engine Option aircraft, or A320neo. Airbus has more than 1,200 orders for its updated single-aisle jet.

Boeing got out to a strong start with its 737 MAX, saying it has commitments for 496 aircraft from five airlines. Even before the board approved Boeing's 737 plan, the company had offered the upgraded 737 to American Airlines in July, which tentatively committed to 100 aircraft. Boeing declined on Tuesday to identify the other four customers. However, Jim Albaugh, president of commercial airplanes, said the bulk of the 737 MAX's backlog comes from carriers outside the United States.

Albaugh explained why the company decided to re-engine the Renton-built 737 rather than come out with an all-new aircraft.

“Our customers have told us they want efficiency and they want it soon,” he said.
Boeing plans to deliver the first 737 MAX in 2017. Airbus' first A320neo will be delivered in late 2015.

The Chicago-based jet maker believes its updated 737 will be 16 percent more fuel-efficient than the A320s already in service. Compared with the A320neo, Boeing's 737 MAX will be 4 percent more fuel-efficient, the company said. On a cost-per-seat basis, Boeing said its 737 Max 8 will save carriers 7 percent compared to the A320neo — the Boeing jet should seat a few more passengers than Airbus'.

Airbus' John Leahy, chief operating officer for customers, wasn't buying Boeing's claims, telling the Wall Street Journal: “The re-engined 737 cannot possibly match the fuel efficiency and maintenance cost savings of the A320neo family.”

The single-aisle jet market is an important one to both Boeing and Airbus, as challengers are lining up to break into a market that Boeing estimates will be worth nearly $2 trillion during the next 20 years. Albaugh said the 737 MAX not only will help Boeing maintain its single-aisle market share but expand it.

The new 737 family will be powered by CFM International LEAP-1B engines. Several changes make the new engine more efficient than the old ones. It has a larger fan — the spinning part that passengers can see in the front of the engine.

Also, more of the air that enters the front of the engine bypasses the engine core, which makes it more efficient, said Magdy Attia, an associate professor in aerospace engineering at Embry Riddle Aeronautical University. Other improvements include materials that can withstand more heat, and a smaller gap between the fan tips and the shell that encloses the engine, he said.

The next major question Boeing will have to answer about its 737 MAX: Where will it be built?

In the next six to eight months, the company will pick a site for the 737 MAX “based on what's best for the company and what's best for our customers,” Albaugh said. But “certainly Renton is at the top of the list.”

Boeing is increasing production on its existing version of the 737 at its Renton facility with plans to reach a pace of 42 aircraft monthly in 2014. The company plans to continue to build the 737 even after it begins deliveries of the 737 MAX.

Earlier this year, Gov. Chris Gregoire started an effort, dubbed Project Pegasus, to keep future 737 work in Washington. The Washington Aerospace Partnership' Tayloe Washburn is leading that effort. Washburn hopes to raise about $600,000 shortly and use the money for a study of the state's aerospace competitiveness.

Already, Boeing's Machinists and engineers unions have committed to donating $200,000.

Washington state lost Boeing's last contest to secure the second 787 assembly line. The company picked South Carolina. Its choice is the subject of a federal lawsuit from the National Labor Relations Board, which claims Boeing illegally retaliated against its Machinists for labor strikes by selecting North Charleston. Boeing denies the claim.

Boeing's shares rose $1.40 to close at $66 on Tuesday.