Boeing shifts focus to possible replacements for popular 737

EVERETT, Wash. —Boeing Co., shifting focus on its next new aircraft, is now leaning toward developing a successor to its best-selling 737 single-aisle jet before making improvements to the wide-body 777.

A new plane probably would seat about 150 to 220 people and could enter service as soon as 2019, said Mike Bair, who leads the product-development team formed last year to study a 737 replacement. Once that jet is well under way, Boeing could consider putting new engines and wings on the 777, he said.

"Six or nine months ago, we were leaning toward a bigger airplane sooner," he said in an interview Tuesday in his office near Boeing's Everett wide-body jet factory. Now, "most of the emphasis is on a new, small airplane."

A commitment on whether to build a new 737, which Bair said will come by June, is pivotal as Boeing jockeys for sales with Airbus. With the 787 Dreamliner and 747-8 jumbo jet running years late and costing billions of dollars in charges, Boeing has vowed to stagger future aircraft programs. That means picking the market segment that will get priority.

A new narrow-body Boeing would contrast with the intermediate step taken by Airbus in December to offer upgraded engines on its single-aisle A320 as of 2016. Chief operating officer John Leahy has said Airbus may not have a new narrow-body before 2027 because it doesn't believe technology available from engine makers would be sufficient before then to warrant spending $10 billion to develop such a plane.

Boeing's shift comes amid a pickup in demand for the 777, prompting the Chicago-based company to boost production, even as Airbus has indicated that its planned competitor, the A350, may be delayed.

Bair said a 737 replacement may be available earlier than Boeing had expected because engineers now have a "better understanding" of the new technology on the plastic-composite 787 and the possible benefits for a single-aisle jet. Narrow-body planes are the workhorses of airline fleets.

The potential gains may be like those achieved with the 787 in the twin-aisle market, Bair said. That would mean a boost of about 20 percent in operating efficiency through lighter materials and the use of more electricity to power the jet's systems.

Getting that performance by the start of the next decade would far outstrip competitors, said Bair, 54, who was named to the 737 project in January 2010 after serving as vice president of business strategy and marketing for Boeing's commercial airplanes business and previously as chief of the 787 program.

"We don't see anything that says, 'If we were to do this, then five years later we'd get leapfrogged,' " Bair said. "We don't see anything on the horizon that could deliver that. We think we've got another really good run."

Boeing and Airbus derive the bulk of their earnings from single-aisle aircraft. The 737, the world's most widely flown jetliner, was developed in the 1960s and redesigned in the 1990s.

Boeing still could follow Airbus' lead and offer new engines on its 737, Bair said. An updated 737 could achieve a savings of as much as 11 percent in fuel burn, he said. The trade-off would be a heavier plane subject to increased strains on landings and requiring more maintenance, Bair said.

That along with other expenses would yield a reduction in costs of 2 percent at most, and most airlines have told Boeing that the company should focus resources on a more attractive option, he said.

"We've taken all the work we've done on re-engining and put it in a box on the shelf," Bair said. "If something changes over the next six months or so and we come to a different conclusion, we can always pull it out and go do it."

Boeing would decide on a new 737 engine only if engineers determine there's not "enough in the toolbox" by midyear to proceed with a new jet, Bair said.

"I don't think that's going to happen," Bair said. "We've got a lot of work left to do, but the technologies we can bundle up for the back end of this decade look pretty attractive."