Behind the scenes, advanced work is underway to ensure Boeing can develop the jet, build it and sell it and get a return on a roughly $10 billion investment.
FARNBOROUGH, England — Boeing executives, supported by some major figures in the aviation world, are certain there’s a market for the next all-new plane they are proposing. So why have they pushed out a launch decision into early next year?
It’s all about calculating the cost to develop the jet and the price they can charge for it – and to work that out, early design activity is already underway in Seattle both for the plane itself and the manufacturing system that will build it.
In a public appearance at the Farnborough Air Show Tuesday and in a follow-up interview, Kevin McAllister, chief executive of Boeing Commercial Airplanes, said the demand for the proposed New Midmarket Airplane (NMA), unofficially the 797, has been validated in consultations with more than 60 airlines.
In both the number of passengers the NMA would carry and how far it would fly, the jet fits in between today’s narrowbody 737s and the widebody 787s.
It’s designed to fly farther than today’s narrowbodies — across the Atlantic, say, or from the Middle East deep into Africa and Europe — yet on routes that don’t have enough daily traffic to fill a big widebody jet.
In an interview Monday, Gus Kelly, chief executive of AerCap, which as the world’s biggest aircraft leasing company knows the requirements of airlines around the globe, concurred that there’s a big enough market for such a new plane.
And on Tuesday at Farnborough, aviation industry titan Steve Udvar-Hazy, executive chairman of Air Lease Corp. (ALC), as well as ALC chief executive John Plueger, echoed that assessment, saying the plane will fill a significant need to replace older 757s, 767s, and early Airbus A330s.
“There is definitely strong interest in the entire global airline marketplace in this aircraft,” said Plueger.
Lab testing the NMA systems
Still, Boeing is moving very deliberately.
“Our strategy is to get it right,” said McAllister.
Behind the scenes an intense planning phase is underway to ensure Boeing can develop the jet, build it and sell it and get a return on a roughly $10 billion investment.
McAllister said his dedicated NMA development team has brought forward work on the airplane design that is more typically done after a formal launch, checking out the airplane systems on various demonstrator testbeds ahead of any production work.
He gave no detail but this seems to mean things like an “Iron Bird,” a lab set-up that simulates the flight control system, and similar simulations of the jet’s electrical wiring and hydraulics.
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In addition, McAllister said, “We’ve done a ton of work” on designing the production system and planning the supply chain.
After the 787 Dreamliner was launched in 2004, engineers did similar studies at Boeing’s secretive advanced manufacturing Developmental Center in Seattle, where they perfected the way that jet’s new composite airframe would be built.
As for the supply chain, Boeing has already taken proposals from the three jet engine makers, GE, Rolls-Royce and Pratt & Whitney, and McAllister said the NMA team has begun to talk about requirements and costs with some other suppliers.
More decisions will be made “as we sift out what makes sense to us to do internally and what makes sense to us to do externally.”
In the end Boeing could decide that the business case isn’t there, that it cannot make money on the NMA plan. In late 2002, Boeing scrapped its planned Sonic Cruiser jet after a couple of years of exploring the concept.
If Boeing scraps the NMA, how would that leave its competitive position against Airbus?
McAllister said Boeing would do fine against Airbus with the current largest 737, the MAX 10, at the small end of the market and the 787-8 at the top end.
Though he expressed great faith in the sales prospects of the MAX 10, some in the industry clearly prefer the Airbus A321neo, which has had blockbuster sales.
One veteran of the aviation world who has been buying and selling planes for 40 years, but who asked not to be identified because he does business with Boeing, said the A321’s performance on take-off and range is far superior to the MAX 10 — “a much more compelling” airplane.
Bringing an all-new commercial airplane to life is the apex of any Boeing leader’s career. McAllister must be hoping that Boeing’s intense work on the NMA delivers a clear mandate to go for it.