Boeing said it expects to launch a new larger version of the 737 MAX by year-end. But industry players are skeptical it will halt the dominance of the rival Airbus A321neo.
San Diego, Calif. – Boeing said Monday it expects to launch a new larger variant of the 737 MAX family, the MAX 10, by year-end.
This latest chess move between Boeing and its great rival Airbus, which had been telegraphed for some time, aims at reducing Boeing’s growing lag in orders for the largest single-aisle jets. But there’s considerable skepticism in the industry that this new model will achieve that outcome.
Boeing vice president of marketing Randy Tinseth, speaking at the annual Americas conference of the International Society of Transport Aircraft Trading (ISTAT) in San Diego, said the planemaker has extended business offers to some airlines that are possible launch customers for the new jet.
The MAX 10 will fit into a segment of the market where the Airbus A321neo has been dominating against the 737 MAX 9.
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As a result, Boeing’s new 737 MAX family trails well behind Airbus’s new A320neo family. With almost 1,400 orders for the A321neo alone, Airbus has a total of just over 5,000 neos ordered, compared to about 3,600 MAXs.
Though Boeing won’t break out its MAX sales by model, it’s clear the MAX 9 has sold poorly compared to the A321neo.
On the sidelines at ISTAT, Toby Bright, a former head of sales at Boeing and now chief executive of aircraft lessor Jackson Square Aviation, said the MAX 10 adds some confusion in the market for buyers like him.
Like most lessors, Bright said, he’s been hesitant to invest in the MAX 9 because it has a small customer base and lessors need to know that a large number of airlines will want a plane before they buy it to rent out.
And though Boeing says it expects to sell many more MAX 9s, now it’s offering the MAX 10, which is not very much bigger.
In designing the new jet, Boeing chose to do a minimal stretch of the MAX 9, because a longer stretch would have required more engineering changes at a much higher cost.
In two classes, a MAX 9 seats 178 passengers, while a MAX 10 should seat around 188.
“We think it will cut into the MAX 9 market, which is already relatively small,” Bright said.
He added that while the size of the customer base is the main consideration for aircraft lessors, that’s less important to individual airlines who may find the MAX 10 ideal for their route structure.
Still, lessors buy about 40 percent of the airplanes in the market.
John Plueger, chief executive of major industry player Air Lease Corp., said in an interview the lessor finalized a deal Tuesday morning at ISTAT to lease seven A321neos to Irish carrier Aer Lingus.
Plueger said he’s interested in the MAX 10, but he’s concerned that it’s coming to market too late and that it will burden the MAX family with too many sub-models.
“I worry about differentiation between the MAX 9 and the MAX 10,” Plueger said.
Aengus Kelly, chief executive of AerCap, the world’s largest lessor, agreed that “if the MAX 10 comes out, the MAX 9 has challenges.”
Kelly has already leased more than 100 A320neos and has 100 MAXs on order.
While airlines once paid Boeing a premium for its 737-800 over the A320, Airbus’s new neo model has closed that gap, Kelly said.
Those two aircraft models are at the heart of the narrowbody jet market, and he is eager to buy both, Kelly said, but “there’s no premium for the MAX 8.”
The MAX 10, he said, doesn’t quite match the performance of the comparable A321, but may reduce the difference enough for Boeing to compensate in pricing.
“On the MAX 10, Boeing knows it’s at a slight disadvantage, but price can close the gap,” Kelly said.
Tinseth claimed the MAX 10 will seat as many passengers as the A321neo but will be much more efficient because it’s 2.8 tons lighter.
To illustrate the difference that much weight makes, Tinseth displayed a slide depicting a small elephant.
He has to hope such ploys will shift the message.
Interviewed at ISTAT, Adam Pilarski, vice president with aviation consulting firm Avitas, said the sales of the A321 against the MAX speak for themselves.
“As much as Boeing claims the A321 is not that good, they seem to be losing,” he said.
Airbus sales chief John Leahy, in his ISTAT presentation, disputed Tinseth’s figures and claimed the A321neo carries 10 more passengers than the MAX 10.
“I’m not worried,” Leahy said.