News Analysis: Boeing maps out ten-year product strategy

737 Final Assembly Line

777 Final Assembly Line

Following yesterday’s comments from Boeing CEO Jim McNerney, it is becoming increasingly clear that Boeing is inching closer and closer toward the implementation of a decade-long strategy to bring a derivative 777 and clean-sheet 737 replacement to market.
The clearest signs yet came yesterday with comments from McNerney that the airframer has all but abandoned re-engining the 737 and instead sees a replacement for its high-volume narrowbody:
If we could come up with the right airplane in roughly the 2019, 2020 timeframe, I personally feel that there’s a strong argument that the market will wait for us, not withstanding the re-enginging. Most of the feedback we’re getting from customers is alignment with that, but we’ve got to work through this year what the airplane, more precisely, will look like.

Putting our backlog at risk twice, only makes sense if the airplane wants to be developed in 2025 or beyond. I think what we’re learning today about what our customers need and what technologies we have available to us, we are leaning toward development in the 2020 timeframe, but we’re going to confirm that as we go through it this year, reserving the option – if we’re wrong – as we go through the analysis to re-engine. But I don’t think it’s going to go that way.

While Virgin America has solidified its role as launch customer for the Airbus A320neo, the competition between the European airframer and Bombardier almost included a third contender, in the form of an all-new aircraft from Boeing, industry sources tell FlightBlogger.
Virgin America says no bid by Boeing was submitted and Boeing as a policy doesn’t discuss its dealings with customers or potential customers.
Virgin’s commonality-driven competition was unlikely to go Boeing’s way, though the timeframe for such an offer of an all-new jet appears to have been “too late” to have been a contender, though it is the airframer’s most advance step yet toward formally offering a new aircraft.
While Boeing’s earnings call yesterday did not directly address specifics on upgrades to the 777, reading between the lines of McNerney’s comments point to new mid-decade derivatives of the company’s largest twin jet.
McNerney says fully replacing a 777 and 737 would not come simultaneously and calls the avoidance of such an overlap as “one of the independent variables in the equation.” For the coming research and development expenditures required for such a project, Boeing’s CEO references “derivatives”, but mentions only one specifically, a further stretch of the 787.

New airplane developments, except for the possible derivatives, a [787]-10 would be an example of that, I think those interests tend to be…the derivatives would tend to be in the second half of the decade and then new airplanes would be at the end.

However, Emirates, Boeing’s largest 777 customer, says it will begin retiring its older 777s (-200s, -300s and -200ERs) starting in 2017 and hopes to replace each one with 70 777-300ER-sized aircraft (354 seats) for non-payload restricted missions like Dubai to Los Angeles. To meet this requirement and timeline, new 777 variants will be required in the latter part of the decade to meet the carrier’s target. 
The extent of the changes remains mightily unclear, though company sources say a common type rating is essential for the next evolution of the widebody, just as it was for the Next Generation 737. Changes ranging from basic fuel burn, manufacturing and maintenance cost improvements all the way to ambitious plans for an all-new composite wing, an additional stretch in a fuselage – also potentially composite – and a major update to the General Electric GE90-115B engine are all on the table.
Ultimately, say company sources, McNerney comments reflect Boeing’s long term commercial business plan, which establishes a development path from the 787-8 and 747-8 freighter and Intercontinental delivering in 2011 and 787-9 in 2013; clearing the way for a 787-10 in 2015/2016, an updated 777 in 2017/2018 and concluding with a clean sheet 737 replacement in 2019/2020.

10 Responses to News Analysis: Boeing maps out ten-year product strategy

  1. Ralph Miller January 28, 2011 at 12:22 am #

    Jon, where are all the Rolls Royce engines for all those 787s parked outside the assembly plant? Have they been delivered? If they are not around Seattle, Boeing is taking a beating that belongs to RR.

  2. Anonymous January 28, 2011 at 2:21 am #

    Haven’t you followed the news? The reason why all these planes are parked has nothing to do with availability of engines (hint: side of body mod, horizontal stab rework, doors rework, electrical system rework, no certification). As the engines are a very expensive part of the plane, they only get installed when delivery is on the horizon, and that requires completion of all outstanding issues and FAA certifcation of the plane. Otherwise Boeing would just have sitting additional hundreds of million USD of “dead” inventory around, not a happy thought for BA Investor that is :-)

  3. SomeoneInToulouse January 28, 2011 at 4:08 am #

    Replace *each* older 777 with 70 new aircraft…? How many thousand 777s are they expecting to operate?! ;-)

  4. CBL January 28, 2011 at 7:27 am #

    The development path proposed at the end of the article is pure wishful thinking, nice to have but highly unrealistic!

  5. StarBlue January 28, 2011 at 9:21 am #

    CBL: Other than the 737RS, most all of the last part of the article is derivatives. And as the 747-8I is showing, first flight in March and delivery in by the end of 2011, is not as time consuming or complicated as a clean sheet design. If you look in the 90s when Boeing seemed to only want to make derivatives, they launched many of them in or around a 2 year cycle.

    787-9: Stretch of the fuselage, same wing
    787-10: Stretch of the fuselage, wing tweak
    777-8: Same size as -300 but probably a “paneliner”
    777-9: Stretch of the -8, “paneliner”, take on A350-1000
    737RS: Clean sheet design

    Anytime Airbus/Boeing/etc do a clean sheet, the engineering teams are huge. So I can see once the 787 gets certified and the -9 gets firm design. Most of that team will be shifted to 737RS while some will stay to finish up the -10. The 747-8F/I team will probably be shifted to the 777. Also remember the certification only requires test done on what changed and not the entire aircraft.

    Do I think Boeing will deliver the 737RS by 2020, no but probably no later than 2022. Boeing learned a lot with new materials on the 737 and that will translate to the RS. I think the only company they will outsource to is Spirit AeroSystems and possibly some of the Japanese companies. But I don’t see a lot, I hope not because the 787 has been a disaster in outsourcing.

  6. Anonymous January 28, 2011 at 9:26 am #

    This plan assumes that the 787 is relatively glitch-free after EIS, and is a profitable aircraft to fly. Both of these assumptions are incorrect.

    Woe to Boeing if they don’t get the tanker contract to supplant the shellacking they will take, once customers start cancelling 787 orders.

  7. Tim Raetzloff January 28, 2011 at 12:06 pm #

    All of this assumes that Boeing can meet the planned schedule. We have seen nothing in the last decade that should cause any of us to believe that is possible. We have been told that 787 production is stable at 2 per month since August. But, go back and count the number of 787s that have been started in that time (started, not finished). The number is little more than 1 a month. The finish rate is below that. As recently as December 20 the schedule was for the 787 line to pulse 2 weeks ago and start LN32. Didn’t happen; the line pulsed last week. According to the schedule of December 20, this week the line should have pulsed to start LN33. Didn’t happen. The line may pulse next week and start LN33, or it may not. The actual output continues to fall further and further behind the planned output. And all of this assumes no more production stand-downs.

    Unless you have seen otherwise in any report from Boeing and I missed it, the electrical control panel “fix” in use is temporary and must be replaced by a permanent “fix”. How many other “fixes” are in the works. It seems significant to me that LN23 has been fitted with engines. I expect that it will become the GE-engine ETOPS test plane as LN9 is now for the RR-engine ETOPS. There are more FAA tests to run than can be completed with just the 6 Boeing-owned test aircraft and still hope to be done with testing in time for a 3rd quarter delivery.

    I live in Snohomish County. One quarter of this county depends on Boeing for a living. I hope that Boeing has got it right this time, but in my heart I don’t believe it. There seems to be a total disconnect between the reality at Paine Field and what the absentee CEO in Chicago believes the reality to be. It painfully reminds me of Bill Agee trying to run Morrison Knudsen from New York because Boise was too primitive for Mary Cunningham.

    There is no reason to believe that this timetable for new and derivative aircraft will resemble reality in any way when we look back in 10 years. There is also some question about whether the 787-9 is truly a derivative aircraft anyway. If Boeing is designing and building a new stabilizer assembly, and if the Bloomberg report that Boeing is designing a new wing to be built by Korean Aerospace is correct, the 787-9 will be somewhere between a new design and a derivative, undoubtedly a superior airplane to the hodge-podge 787-8, but maybe too late to save the 787 reputation.

  8. SomeGuy January 28, 2011 at 12:14 pm #

    SomeoneIn Toulouse,

    I think they were thinking replacing each model (-200s, -300s and -200ER) with 70 planes each, not replacing each tail with 70

  9. WingBender January 28, 2011 at 3:21 pm #

    @TR: Korean Aerospace will not be building the 787-9 wing. They will be supplying composite ribs to the wing partner, Mitsubishi. The wing ribs in the 787-8 are aluminum; some of the ribs are being changed to composite for the -9.

    @BA Investor: Your shares have dropped below $70. My condolences.

  10. alloycowboy January 29, 2011 at 4:01 pm #

    This is good news for Bombardier and their C series.