Boeing Bets On Replacement Over 737 Re-engining

[kiwi grey]

I think EADS may be thinking that now is the time to go because a number of factors are all acting together:

• They perceive that there's pressure from underneath on the A319/A320 from Bombardier (and maybe even Sukhoi and/or Comac) - the A318, like the 737-600, is already toast
• They believe that open-rotor type engines are not going to be in play until closer than 2025 than 2020, so they'll get 8 to 10 years out of this 'mid-life kicker'
• They think this will put a major squeeze on Boeing, and the best time to give a competitor a good kicking is when they're already down
  
  • A 737RE would be much more expensive than the 320NEO, because Boeing will have to do something serious about the undercarriage to make clearance for the larger engines. Even then, maybe the GTF wouldn't fit.
    
  • Boeing are in a world of financial hurt on the 787 and 747-8 programmes - it looks like they're going to make huge losses on the 787 for a number of years as they sold the first several hundred positions way too cheap, and they've had to pay off unhappy customers because they're so late. Sales of the 747-8 are, um, modest, and it's late, too
  • If the A350XWB performs as Airbus believe that it will, then Boeing will have to spend another pot of money on the 777 if that's going to continue to be competitive.
  • EADS doesn't think Boeing are going to make any money on KC-X, either because EADS will get the gig, or because EADS - who have relatively almost no development expense - have squeezed the price down so much that there'll be next to no margin for Boeing.
    

So from EADS' point of view, this may be a 'perfect storm' moment for Boeing, and time to go for the jugular.