Case for 737 Re-engining Will Weaken if Airframe Advances Accelerate
A decision to re-engine the Boeing 737 will hinge largely on the company's ability-or lack thereof-to introduce an all-new narrowbody by the end of this decade, Boeing CEO Jim McNerney said last month. Although the company's customers, “on balance,” would rather see an all new-airplane than a re-engining, according to the Boeing chief executive, the case for retrofitting new engines on the current 737 strengthens if Boeing reaches the conclusion that it could not bring to market a markedly better airframe by early next decade.
“The decision framework for us is 'When does a new airplane come together in terms of technology readiness and customer willingness to pay for one?'” said McNerney. “We think that's the first question that has to be answered. If that is some time this decade, then the case for re-engining weakens dramatically. If you did re-engine you'd be doing two major developments in the course of four or five years, which makes no sense.”
Meanwhile, the company continues to contemplate raising production rates of the current model 737 beyond the 35-per-month rate it plans for 2012.
McNerney said Boeing would decide by early fall whether or not to raise rates beyond 35 per month. “We were mildly surprised at the strength of new orders we've seen over the last quarter,” said McNerney. “It did support our thinking to take up production rates and supports our ongoing analysis to think through whether there's more opportunity beyond what we've announced.”
However, any decision along those lines will depend on the ability of the 737's supply chain to support such a move. “I think the supply chain is the key question,” said McNerney. “I think moving from where we've been-in the low 30s-to something north of 35 [per month], while your competitor is also looking at moves and other airplanes are also moving up in rate, can put pressure on suppliers…So we're just working very methodically through different scenarios, and if the market is there, and the supply chain is committed and capable, you will see further movement.”