Boeing prefers new narrow-body jet to 737 upgrade

Boeing Co. prefers to develop a new narrow-body jet around 2020 to an upgrade of its 737 model even with Airbus offering new engines on its latest A320 model, Chief Executive Officer Jim McNerney said.

"I feel pretty comfortable that we can defend our customer base," McNerney said today at a Cowen & Co. conference in New York. He said Airbus is only now catching up to Boeing, and "we're going to be doing a new airplane" that will outstrip the A320neo announced in December.

Boeing hasn't committed to a 737 replacement or a revamp of the current jet. Jim Albaugh, president of Boeing's commercial airplane operations, said in a Jan. 12 interview that the decision would come by midyear.

Airbus is now using the A320neo to target current customers and those considering Bombardier's new CSeries jet, McNerney said. "That doesn't mean that as they get deeper into the development they're not going to approach our customer base _ I think they will," he said.

Prices should be stable for now on the single-aisle 737, McNerney said. On the wide-body 777, "unexpectedly strong" demand in the past three months is spurring Chicago-based Boeing to study further production increases, McNerney said.

Boeing is "very focused" this year on starting deliveries of its 787 Dreamliner and 747-8 twin-aisle jets, McNerney said. Both planes are running behind schedule, with the 787 now more than three years late in entering commercial service.