Boeing has the financial ability to develop a new stretch of the 737 Max and a clean-sheet middle of the market (MoM) over the next nine years while reducing capital spending from a peak level in 2016, chief executive Dennis Muilenburg says.
Speaking at a Morgan Stanley conference, Muilenburg says the timing of both projects would “would feather in very nicely and give us a nice stable [research and development] profile”.
Capital spending is expected to peak this year at $4.8 billion, including more than $1 billion announced in the second quarter in reclassified research and development expense from the 787 development programme.
Boeing expects capital expenses to continue declining as the current 737 Max family and 787-10 transitions from development into production over the next two years, while 777X development expenses taper off after 2018-2019.
That creates a window for Boeing to execute a “relatively minor” development programme for a new stretch of the 737 Max – called the 737 Max 10 — in 2019 to 2020, Muilenburg says. That would be followed by a more significant programme to develop a Middle of the Market (MoM) product for entry into service in 2024 or 2025, he adds.
Boeing is still evaluating the market opportunity for both options. By increasing the length of the 737 Max 10, Boeing would likely need to install the larger CFM International Leap-1A engine, which would require modification to the wing and landing gear, in addition to the stretched fuselage.
The MoM category is a more challenging option. Boeing has identified a gap in the market for an aircraft with about 4,800nm to 5,000nm range, which can accommodate 200-270 passengers. That equates to an aircraft with the payload and range characteristics of the 767-200, yet must offer similar economics to the 737-800 narrowbody.
Source: Cirium Dashboard