Boeing expects decision on 737's future by year-end

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Boeing has refined the timeline for a final decision on re-engining the 737 or opting for a clean sheet replacement of its narrowbody family.

Jim Albaugh, Boeing Commercial Airplanes president and CEO says that a decision would be made "probably this fall", placing a verdict in the September through November time period.

Joining Albaugh at a recent investor meeting, Boeing CEO Jim McNerney says that increasing cash flow once the company begins 787 deliveries will enable Boeing to "ride high for a while" heading towards 737 and 777 development, adding "that's not a bad thing".

The decision scheduled for later this year is set against the backdrop of sold out delivery slots for its existing 737 family and a planned production rate increase from 31.5 to 34 aircraft per month scheduled for early 2012.

McNerney acknowledges that increasing narrowbody production rates on both sides of the Atlantic are driven, in part, by new programmes such as the Bombardier CSeries.

"If we don't continue to ramp up, if Airbus doesn't continue to ramp up, my view is we're going to drive many of our existing customers to buy some of those new airplanes. And I think one of the ways that we protect where we are is to make sure that we have the capacity to address what their demands are, and we're working that very hard."

With this decision looming, Boeing expects a decrease in research and development spending in 2011, "although not to the significantly low levels that we've seen historically as we protect for the potential 737 and 777 investments and complete the 787 and 747 derivatives", says company CFO James Bell.

Bell expects R&D spending to decrease by about $500 million next year from 2010 levels of $3.9 to $4.1 billion as 787 development slows, adding that "we will reassess timing and levels of our R&D expenditures as we make the strategic decisions on 737 and 777 later this year or early next year".