Boeing med nytt fly - Curt Lewis

Boeing to Develop new Midsized Aircraft

Boeing seeks to develop new "middle of the market" aircraft due to high demand from Asian market

Due to high demand from the fast-growing Asian market, Boeing Co (NYSE:BA) has decided to build "middle of the market" aircraft after seeking approval from its board. However, it would not be an easy task as the aircraft manufacturer would have to meet the price levels evaluated during the survey along with the manufacturing cost.

Despite the challenges, Boeing just might go for the new aircraft expected to have seating capacity of 270 passengers; the company aims to offer flights for up to 10 hours while flying to routes between 2,900 and 5,000 nautical miles.

According to the research report, Boeing estimates demand of roughly 3,000 to 5,000 midsized commercial aircraft that is also expected to replace as many as 2,000 jets of existing aircraft variants of similar specs. According to the report, the new midsized aircraft might replace the old 757, along with the current version of 767 that would generate sales of 2,200 jets.

"It is not easy, it is not impossible. We are not there yet." Boeing's airplane development general manager Mike Delaney told reporters in a briefing. "But in the last six months Mike's team has closed the gap pretty good." The aircraft manufacturer is said to have conducted meetings with 36 various airline customers to evaluate the demand of the aircraft after which it gained confidence in the midsized aircraft.

The company expects the aircraft will enter into service by the middle of the next decade, subject to the approval from its board. However, Boeing will still face tough challenges to meet the delivery timelines without incurring any technical delays. Some industry analysts expect the company to start receiving new orders of the aircraft by the end of this year after which the company will focus on developing the new variant.

Along with the middle of the market aircraft, Boeing is also working on various other models, including both single aisle and wide body jets. The company was reportedly working on the larger version of its best seller 737 Max commercial jet having seating capacity of around 250 passengers.

Also, yesterday the company was also reportedly looking ahead to stretch its 777X variant to launch a new jumbo jet having seating capacity of more than 400 passengers. However, these new variants are still on paper as the company has not yet officially announced the launch of new variants.

Increasing the Competition
Through the launch of middle of the market aircraft, Boeing is poised to increase competition with its biggest rival Airbus Group SE (OTCMKTS:EADSY) that has a higher share in Asian markets. The new model, if launched, is expected to receive high demand from Asian airlines that might offset orders placed for Airbus' jets.

Along with the midsized aircraft, if the company also launches its extended version of 777X variant that will figure in the jumbo jet category, it is expected to compete with Airbus' A380 jumbo jet that is already facing issues in getting new orders. Boeing has reportedly conducted talks with airlines, including Emirates, that operate jumbo jets to evaluate the market of the new aircraft. On receiving positive feedback, the company is looking forward to offering the new variant.

Tough Market Conditions
Boeing seems to be bullish with respect to launching bigger commercial aircraft as airlines around the world are shifting their focus from wide-body bigger jets to single aisle smaller aircraft. Boeing estimates in its 20-year future outlook that more than 70% of the new orders would comprise smaller single aisle commercial jets as compared to large wide-body jets.

This might be a tough challenge for Boeing as the company has stopped receiving more orders of its wide-body jets. According to its year-to-date order book, the company received only four orders of its 747, seven orders of 767, 12 777 and only 13 orders of 787 as compared to 240 orders of its 737 variants during the same period. However, if the company receives advance orders of the new variant, the company will be profitable in the long run.