Boeing is starting to favor new plans to increase the yearly output of 737s in the short-term and delay the delivery of a narrowbody replacement beyond 2015.

The manufacturer’s narrowbody product line is expected to garner the most orders among Boeing’s aircraft offerings in 2008 as US airlines finally join a four-year-long, global ordering surge for single-aisle aircraft, says Scott Carson, Boeing Commercial Airplanes president and CEO.

But US airlines still face a need to replace hundreds of aging and fuel-thirsty McDonnell Douglas MD-80-series aircraft, driving demand for new 737 sales, he says.

The market environment has prompted Boeing to re-think its “cautious” production rate strategy on the 737. Boeing delivered 737s at an average rate of 31 a month in 2007, three fewer than the 34 narrowbodies built monthly by Airbus.

Boeing’s chief rival in Toulouse also plans to increase A320-series output to 40 aircraft per month in 2010 with the opening of a second production line in China.

“We’ve been resisting the temptation to match our competitor’s numbers,” says Carson, addressing the Cowen & Co.’s annual aerospace and defense conference.

Boeing, however, is finishing up studies on the capability of its supply base to sustain a production rate jump and the market’s interest in higher 737 output. Carson plans to review the findings of those studies within two months.

Right now, he adds: “It feels like there might be enough solid demand to do it. The reason is there are still 500 MD-80-class airplanes out there in the fleet that are not very fuel efficient.”

At the same time, Boeing also may disappoint a rising drumbeat of airline CEOs, who have persistently called for either Boeing or Airbus to deliver a replacement for the 737 and A320 families after 2012.

Boeing and Airbus have resisted such urgings, saying that the technology necessary to yield a 15-20% performance improvement is unavailable until at least 2015. Carson now says that Boeing may push a replacement back even further.

“The market response … tends to want to push replacement thinking out a little,” he says. But “we’re still prepared for 2015.”

If the 737 replacement programme is postponed, Carson says, Boeing will likely deliver a product refresh for the next-generation 737 family in the next few years.

Source: sister premium news site Air Transport Intelligence news