Boeing seeks to firm investment for likely 737 and 777 upgrades

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While Boeing expects an overall decrease in research and development funds available in 2011, the company is taking steps to ensure that future 737 and 777 investments are supported.

During the company's fourth quarter 2009 earnings call on 27 January, Boeing CEO James McNerney said he expects the 2011 research and development budget to be a "substantial reduction" from the $3.9 billion to $4.1 billion forecast for 2010 as the flight test programmes for the 747 and 787 wind down. However, he says the remaining budget would continue to allow the company to "pursue potential investments in 737 and 777".

Specifically those investments include potential re-engining of the 737, a study that is currently "under active consideration from a product requirement standpoint", says McNerney.

"We're beginning to harden up alternatives, maturing the technologies with the right amount of R&D spending, and have a wedge in our budget to quickly move on both as the market requires," he says.

Boeing rival Airbus expects to make a decision on re-engining the A320 family during 2010.

Additionally, McNerney acknowledged that an open question remains regarding potential deferrals by existing 737 customers to take advantage of a re-engined airframe later in the decade, putting pressure on existing production rates which have remained at a steady 31 aircraft per month throughout the recession.

"I think there is always this tension when new technology is introduced," says McNerney. Adding that "It's that customer base that is pushing us to consider re-engining, or in some cases, a completely new airplane."

While not offering insight into Boeing's preferred option, McNerney says airlines appear to be focused more on increasing productivity of existing models rather than showing concern about product obsolescence. "That's a change in the behaviour out there. Many of the operators are anxious for us to move," he says.

For the 777, Boeing revealed at the 2009 Paris air show that it was studying a potential re-winging of the large twin-engine aircraft.

McNerney maintains that a decision on the future of the 777 programme would come after more details are available regarding the Airbus A350-1000, and after 737 decision is made.