American Airlines Deal Forces Boeing To Answer Re-engining Question

 - July 25, 2011, 9:30 AM
American Airlines already operates more than 150 Boeing 737-800s and holds firm orders for 52 more, apart from last week’s commitment for another 200. (Photo: Boeing)

It seemed to take an order of epic magnitude, but Boeing finally appears ready to launch a re-engined version of the 737NG. Those in favor of the approach all along can thank American Airlines and, by extension, Airbus, for finally convincing Boeing to jump off the proverbial fence. After all, an order for 200 airplanes hung in the balance, and, if not for the existence of the A320neo, American might well have opted to maintain its exclusive relationship with Boeing. 

Rather, the airline decided also to order 260 Neos, giving Airbus the toehold with American it has so long coveted. All told, American announced it would place firm orders for a total of 460 airplanes as the centerpiece of a plan to retire its entire fleet of McDonnell Douglas MD-80s and Boeing 757s.

Boeing Commercial Airplanes CEO Jim Albaugh said he expected the company to launch the re-engining project “some time this fall,” following expected board approval. American’s 100 re-engined 737s, scheduled for first delivery in 2017, would come equipped with CFM Leap-X turbofans, following delivery of an initial batch of 100 CFM56-7B powered 737NGs starting in 2013. The deal grants American options on 40 current-generation, CFM56-7B-powered 737s and 60 of the Leap-X-powered variants.

The decision to re-engine comes despite several signals sent by Boeing over the past year that its customers would rather see it develop an all-new airplane for introduction some time around the turn of the decade. During a July 20 press conference in Dallas, Albaugh attempted to explain the reason for the seemingly abrupt change of heart.

“The technology is there to do a new airplane, but the issue is the production system…how quickly you could ramp up and how efficiently you could build forty, fifty, sixty composite airplanes a month,” said Albaugh. “Quite frankly, we did not have those answers, and the longer it took to get that answer, the more concern we got from our customers about the fact that they needed a more fuel-efficient airplane now rather than later.” 

Meanwhile, delivery of the 260 Airbus airplanes will loosely coincide with the Boeing deliveries. American plans to take the first of 130 current-generation A320-family airplanes starting in 2013, then begin accepting delivery of A320neo variants in 2017. The deal includes options and so-called purchase rights for another 365 airplanes, and gives American the ability to covert its delivery positions into A319s, A320s or A321s.