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Reports of new 737 Max derivative premature: Boeing

Boeing chief financial officer Greg Smith on 3 February drew an even darker veil around the company’s plans for a new product aimed at addressing a gap between the 737 Max 9 and the 787-8.

In the past, Boeing vice-president of marketing Randy Tinseth has said that customers had expressed interest in an aircraft about 20% larger than a 757.

But Smith, speaking at a Cowen and Company investors meeting, stopped short of making any comparisons to the dimensions of other aircraft in Boeing’s portfolio.

“It’s premature to configure the airplane this point,” Smith says.

Smith’s statement came in response to a question from Cowen analyst Cai von Rumohr, who asked if a new report is true that Boeing is discussing a larger version of the 737 Max with a new wing as an option to fill the gap in the middle of the portfolio.

“We’re in constant dialogue with our customers to understand their needs today,” Smith replied, then added later: “We do see an opportunity in that segment of the market.”

Smith’s ambiguous answer contrasted sharply with a Boeing response last year to a news report suggesting Boeing was considering reviving the 757-200 with new engines.

In that case, Tinseth publicly denied the report a day later, saying that Boeing had studied such a concept a “couple” of times, but concluded there was no business case to support a 757 revival in the 2020s.

Launching a larger version of the 737 Max also would appear to clash with Tinseth’s previous statements that a consensus had formed among customers around an aircraft about 20% larger than a 757. The 757-200 is itself more than 20% heavier than a 737 Max 9.

It also contrasts with an analysis published by Merrill Lynch market analyst Ron Epstein in September. Epstein’s analysis concluded that Boeing was most likely to offer a twin-aisle aircraft with an elliptical fuselage. Such a configuration could deliver an aircraft with roughly the range and passenger payload of a 767, but with the economics of a 737-800, Epstein said.

But other analysts have noted an elliptical fuselage would deliver reduced aerodynamic drag, but at the expense of cargo payload volume.

On the other hand, the concept of a stretched derivative of the 737 Max would match a nearly two-year-old objective set by Boeing chairman James McNerney. In an investors conference in May 2014, McNerney said that Boeing preferred to launch a derivative to replace the 757, versus a clean-sheet design. “The headset will be to avoid the moonshot unless we have to,” McNerney said then. “The headset will be to mature technologies we’ve got to address it.”

In the 3 February investor meeting, Smith offered more details about the potential timing for a new product. Nothing will come before the company’s previously announced development projects, such as the 777X, Smith says. The 777-9 is scheduled for delviery in 2020, with the 777-8 following two years later.

“Anything would be post-777X,” Smith says.

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