airliner designs

Jul 28, 2016

Boeing under financial and airline pressure to ‘fix’ 737 MAX family

While Boeing keeps talking about a better MAX or an all new MoM jet, Airbus is keeping quiet and winning the orders for its alternatives

Ben Sandilands — Editor of Plane Talking

Ben Sandilands

Editor of Plane Talking

Airbus A321 First Flight - Mobile, Alabama FAL
First US built A321 takes off recently from Airbus America in Mobile, Alabama

Two more pressure points have been applied to Boeing’s 737 MAX single aisle program, and the company’s apparent disarray over defining a new jetliner project described as a Middle of the Market or MoM airplane.

Earlier this week US carrier JetBlue ordered more Airbus A321s, the very model of its single aisle family that is doing the most damage to Boeing’s uncompetitive 737-900 and 737 MAX 9 alternative offerings.

That order includes 15 of the new engine option or high-tech A321NEOs, which would allow JetBlue to take on lower density but non-stop routes across the North Atlantic, and compete directly with the similar ambitions of the low cost Euro-Asian operator Norwegian.

The impact of these developments using longer range single aisle jets across the world’s most fought over air routes will be comparable to the recent decision of AirAsia to get 100 such A321NEOs for use in the Asia-Pacific hemisphere.

But just after the JetBlue announcement it was reported that Boeing is delaying payments to critically important suppliers to “better manage cash” and made its first loss in almost seven years.

As the Bloomberg report linked to above makes clear, this ought not be overstated and made to sound like a backs-to-the-wall crisis. However it does raise questions over Boeing’s capacity to fund any of the various MoM concepts it has floated since last year.

Boeing has to show airlines both its preferred all new design, and its board and investors, the money to build it. A year of leaks about what it might, will, could, or may do has worn out its welcome, and Airbus is continuing to eat its lunch with a much better thought out and operationally attractive range of single aisle new tech remakes of the A320 family.

Airlines appear divided as to what they want in an MoM, in terms of size, range, and whether it should be single aisle or twin aisle. In the current market, where airlines are ordering single aisle jets that may not be delivered until well into the next decade, Airbus may be winning its orders on capabilities, and Boeing, on price. (Boeing is tipped to land a small order for 737 MAX jets from Malaysia Airlines this week. )

Those who follow Boeing’s fortunes have been told by company officials that it is considering a 737 MAX 10 to do what the MAX 9 can’t, which might, or might not, involve a version of the CFM LEAP engine currently only able to be fitted underneath the wing of the A320 NEOs because they have the necessary ground clearance.

This has caused its own set of problems in that adapting the MAX line to cope with the larger diameter of the engine used on the Airbus NEOs will be costly.

Constantly leaking details of something that then keeps failing to materialize will prove ever more damaging if airlines give up and choose an alternative that is flying and comes with commitments to further efficiency upgrades in coming years.

7 comments

Leave a comment

7 thoughts on “Boeing under financial and airline pressure to ‘fix’ 737 MAX family

  1. Giant Bird

    The suppliers are in the box seat. Boeing cannot deliver planes and get payments for jets without their parts. Boeing cannot switch suppliers without enormous expense. Boeing has broken the supply contract. As a former Financial Controller they would not be getting 120 days. I would be putting them on a cash basis. Not one more part delivered until they paid for all parts already delivered and cash on delivery for all future deliveries plus I would hit them with a price increase as the contract has been broken. The first supplier to hit them hard gets everything, the last gets nothing. The extra profit you make due to Boeing’s default on the contract means that you can undercut competitors for the next Boeing design if there is ever one.
    In business the tough survive. A sale is not a sale until you get paid, up to that point it is just cost. Boeing does not do this to critical suppliers unless things are desperate. They must be loosing a lot on money on the 787 & 747.

  2. comet

    The current Boeing cash flow problems are a result of the 787 Dreamliner fiasco.

    It drained something like US$28 billion on a project that will probably never make a profit. It tied up resources, making the 747-i run late, and making it impossible for Boeing to even dream of making a new airframe.

    Unable to make an all-new airframe, they’re stuck forever making modifications to the 1967 vintage 737 design.

  3. Mark Skinner

    Yes, but comet, they crushed the unions. Taught them a lesson.

    A triumph of management by MBA over management by engineering.

    Just like Australia.

  4. derrida derider

    So Boeing has told Bloomberg “its no big deal”. No doubt these are the same spokespersons who informed us of the triumphant progress of the 787 project.

    Giant Bird is right – no business does this just to save a few pennies this year, because of the of the ongoing consequences . Not even Boeing’s management is that stupid. Nope, this is a signal they’re in big trouble.

    What are the odds of President Trump backing a Boeing bailout? He will, of course, denounce it all as a French plot and sell it cheap to MiG instead.

  5. Tango

    First its clear that Boeing screwed up with not coming out with an 737RS two generation ago, not this one. It did not have to be the latest whiz bang, just match the A320 series and have room for growth (engines and wings the way the A320 did)

    What new management does is an unknown, keep in mind that Boeing spent billions on shareholder buy back, they did not have a loss, they had a fabricated loss. It may be legal, hopefully a new administration will change that.

    But while we are hepaign justified abuse on Boeing, Airbus has problems of its own. The A350 is in shambles and not just because of Zodiak. Av Week noted gthat others were hiding behind Zodiak problem and as those lcleared up they came out.

    So for all the critics, you might want to think about Aibus who had their A380 debacle and all Beong lessons and they still are gvetting bit in the butt.

    Lesson: It ain’t easy.

    While the A320 GTf wioll clear, that has been a problem.

    A400 has unreliable engine (gear box currently) and they are loosing their butts on that program.

    Beoing is going to have to do the 737-10, and while they still loose, not as baldy

    And they have the monehy to do the 797, don’t fool yourself (they have the choice of goin gout of business as wlel but I don’t think so)

    And lastly, Rockwell will get their money, they will not threaten Boeing, Boeing will pay for the attempt but it will be quiet. Rockwell is a good supplier and its not getting even its keeping future contract going. Boeing is stupid enough to hurt themselves (777x gear is an example that they will wind up owning the company that got the contract)

    Alabama is going to make nothing but A321, then A321NEO, no A320s. Happy Airbus, will see if Alaska Airlines takes up those reserved spots.

    1. Dan Dair

      Having translated it from ‘American’-English into something I can understand,
      I mostly agree with you.!!

      Airbus has its problems, but generally-speaking they’ve admitted to them & put measures in place early to mitigate them.
      Also, they actually have a range of designs and variations in-place & available right now, which cover every sector of the commercial aircraft market. (Sure they might not sell many A318’s & 9’s because there are better ‘dedicated’ small airliners out there, but they have a viable product to sell if asked)
      The rest of their range will cover pretty-much every eventuality.

      The only thing Boeing has to ‘crow about’ is the B777.
      It’s still the sector-leader two decades (& more.?) since it was first introduced. (& the two relatively recent crashes show how robust the airframe is)

      The B787 still has the battery/charger issues as yet unresolved but they have built an oven around it to toast marshmallows on.!! (turning a negative into a positive.!!!)
      Overall, it seems like an excellent aircraft in service, but it looks like they’ll have to keep making them for thirty years to start to see a return on their investment.
      Airbus is in a similar situation with its A380, but they’re not ‘cash-poor’ so it’s much less of a problem to them & they are pretty certain that the market will come to the A380 eventually.

      Boeing also appear to be concerned that the A350 will be better-placed in the medium-large sector than the B787, possibly just because they designed their aircraft second & had the benefit of a bit more market-trend information to go on.
      Of course, if Boeing had managed to get the B787 out on time & right first rime,
      perhaps its sales would have swamped the A350 before it ever got to market.?

  6. DXBMICK

    I thunk l no wot Tango saying was

Share this article with a friend

Just fill out the fields below and we'll send your friend a link to this article along with a message from you.

Your details

Your friend's details

Sending...