Avolon Sees Clear Winners, Losers In 737 Max Lineup

 - August 31, 2017, 9:02 AM
Avolon expects the Boeing 737 Max 8 to occupy the core of the narrowbody market. (Photo: Boeing)

Orders for Boeing’s 737 Max 8 and Max 10 will predominate among the company’s Max narrowbody family, while the Max 7 fills a niche and the Max 9 finds itself all but squeezed out, a recent analysis from lessor Avolon concludes.

The conclusions fit with macro trends favoring higher-capacity aircraft, signifying that OEMs will fight for future narrowbody orders at the upper end of the respective aircraft families.

“Comparing the mix of the smaller variants of the current 737 NG and A320ceo family fleets with their re-engined successors, it is apparent that demand has shifted; the smaller variants of both families have all but disappeared from the order books," said Avolon, which counted 136 Max jets and 159 neos in its 921-aircraft portfolio as of June 30. “Whilst the 737-700 and A319ceo hold a combined 17 percent of the current fleet, the Max 7 and A319neo account for a mere 1 percent of family orders.”

On the high end, the 737 Max 9/10 held a 29 percent share of the 2,065 orders booked at the time Avolon published the report in early August, versus 71 percent for the A321neo. Before the Max 10’s launch at June's Paris Air Show, Boeing’s share amounted to only 15 percent.

“The Max 10 will serve as a crucial gap-closer to take market share back from the A321neo and is expected to be a compelling unit-cost aircraft,” the report said. The highest-capacity Max will appeal to a cross-section of airlines, including mainline, low-cost and charter operators, it added. Fifteen 737-800 operators also fly A321s, “a strong indication of the lack of a suitable 737 family member to grow into, but no shortage of demand,” the lessor noted.  

While the Max 10 has so far proved a worthy addition to the 737 family, it carries “limitations,” notably a maximum-thrust option that totals 7,000 pounds less than that of its competitor, Avolon said. The difference gives the A321neo an edge “in markets where airfield performance and capacity” are important. The difference will help the A321neo outsell the 737-10 by a two-to-one margin, it projects.

The lessor owns the first Max 8 put into revenue service—with Malindo Air in May—and remains bullish on the model. At Paris, it signed an MOU covering a firm order for 75 airplanes and options on another 50, amounting to the lessor’s largest single commitment for Boeing aircraft. “The Max 8 represents the largest opportunity for the 737 Max family due to the popularity of the 737-800 and its size positioning at the heart of the market,” Avolon said.

Avolon expressed less optimism about the high-density Max 8, which boosts passenger capacity to 200 with the addition of an exit door and a modified cabin layout. Only three carriers have signed for the aircraft, but one—737-800 operator Ryanair—has ordered 110.

Strong demand for both the Max and the neo families has generated orders and LOIs for more than 10,300 airplanes, and Avolon expects continued brisk sales. In the 737’s case, 65 percent of 737NG operators haven’t committed to any next-generation narrowbodies, including 15 airlines that fly at least 30 of the narrowbodies.