Hazy concludes Boeing faces challenges in 737 re-engine

Washington DC
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Industry icon Steven Udvar-Hazy has surmised that Boeing has its "work cut out" in developing a re-engined 737 narrowbody.

After months of speculation Boeing in July unveiled plans to developed a re-engined narrowbody in conjunction with a massive order announcement from American Airlines split between Boeing and rival Airbus. Part of American's deal with Boeing includes 100 of the re-engined Boeing 737, which the carrier has yet to firm up.

Air Lease chief executive Hazy during a 11 August earnings call said personally he was disappointed in Boeing's decision to re-engine, "but I fully recognise and understand the reasons why Boeing is going down this path".

Those reasons include two yet-to-be certified programmes - the 787 and 747-8 - that have "been a tremendous negative cash flow for the company", said Hazy. "We feel until those aircraft are out flying, it would have been very difficult for Boeing to make a $10 billion or $12 billion commitment to develop a new aircraft."

Highlighting the implications of existing programmes, the inability to determine where the aircraft will be built, "and some of the other labour issues Boeing is faced with right now, I think they took sort of a band-aid solution", said Hazy of the decision by Boeing to re-engine.

Hazy also believes there are still questions over how competitive the 737 re-engined aircraft will be with the Airbus A320neo. He concluded Boeing has its "work cut out because the airplane is closer to the ground, it is an older generation airplane, the original design dates back to 1967. So I think Boeing has many, many challenges to overcome to make it an effective airplane".

Outlining Air Lease's current outlook on the re-engining effort by Boeing, Air Lease president John Plueger stated: "Until that aircraft is fully and specifically defined, until Boeing gets board approval to launch that aircraft, I think it's a bit premature to draw a lot of conclusions or forward projections as to what we may or may not do."