Boeing has said it is considering a new jet that would have 200 to 250 seats and be capable of flying around 4,800 nautical miles. Boeing has said it thinks there is sufficient demand for such an aircraft, which would fit between its single-aisle 737 and long-range 787 Dreamliner. But the company hasn’t given a figure and hasn’t said it would proceed with making one.
analysts Ron Epstein and Kristine Liwag said in their report, published Thursday, that they looked into the market dynamics for a new plane in response to investor demand and found “a strong case” for Boeing to go ahead. They estimated that if Boeing did so, it could launch the effort with its first orders around 2018 or 2019 and delivery to airlines around 2024.
(Bank of America)
The report estimates a market for around 2,685 aircraft from airlines to replace older planes or swap in for inefficient, long-range jets that they are currently using for medium-range flights. That estimate, which doesn’t factor in market growth or new routes using the plane, would mean enough demand for about 14 years of production, assuming Boeing captures more than half of the market for such a plane, the report said.
Boeing internally refers to the new-plane concept as NMA, or new medium-range airplane, according to a person familiar with Boeing’s planning. The company has been polling more than 30 possible customers, including airlines that have traditionally shied away from expensive twin-aisle aircraft like low-cost carriers.
Boeing said it is focused on its current development programs planned for 2017 to 2020, but in a statement noted “we are developing in-depth knowledge of the mid-market segment. This is an evolving market and we are taking a thorough look at what the market requires and how best to address it.”
Bank of America estimates a new Boeing jet would cost $15 billion to develop and would list for around $163 million each, but that discounts would reduce that to about $81 million each in revenue. The price estimate doesn’t take into account possible impact from competition from rival Airbus Group SE.
The report said “Boeing’s ability to recover its cost of capital on the program is predicated on executing a more cost effective production method than the 787,” which has struggled with high production costs building the mostly carbon-fiber composite jet.
The Bank of America analysts think a new plane would be a small, oval-shaped, twin-aisle aircraft with seven economy-class seats across the cabin to quickly board and deplane passengers. They think the airplane’s body would be made from aluminum and its wings from carbon fiber.
Boeing has said it is still weighing whether a new jet would have one aisle or two.
(Jon Ostrower - The Wall Street Journal)