Boeing Explains Why It’s Taking Its Time on ‘797’ Business Case
(Bloomberg) -- Boeing Co. doesn’t seem to be in a hurry to move along plans for a new family of mid-range jetliners dubbed by observers as the “797” -- even as some long-time customers grow impatient and a rival Airbus SE plane gobbles up sales.
Dennis Muilenburg, Boeing’s chief executive officer, gave a peek into the complex calculations involved in building the business case for what Boeing calls the NMA program, for New Mid-Market Aircraft. The Chicago-based planemaker plans to make a decision next year on whether to launch the program, with a possible commercial debut in 2025.
“We’re looking at it both from an airplane and downstream services standpoint, so an integrated life-cycle view,” Muilenburg said during the company’s quarterly earnings call Wednesday. “It’s important that we get it right, and we’re going to take the time to get it right.”
He’s referring to initiatives to ensure the plane can reap more revenue over its 30-year commercial life, while also lowering factory expense so that Boeing can make the twin-aisle jets at a cost closer to that of highly standardized narrow-bodies. Boeing thinks it can broaden the 797’s sales appeal -- and lifetime revenue -- by combining an all-new airplane with a design that encourages airlines to keep buying data analytics, maintenance and spare parts from the planemaker.
Airbus’s A321neo is already nibbling away at the smaller end of the 220-to-270-seat market Boeing is targeting for the 797, and the European manufacturer may bump up its single-aisle jet’s range to make it even more competitive.
Boeing’s design must also appeal to a wide array of potential airline customers. U.S. carriers such as Delta Air Lines Inc. are seeking replacements for Boeing 757 and 767 jets reaching retirement age, while rapidly emerging low-cost carriers are branching out across Asia.
“There’s a different value proposition for different airlines,” Muilenburg said. Some carriers are focused on reducing operating costs, while others are fixated on reducing capital investment. “It does give us more parameters to look at. It gives us more ways to construct a business case for the future, and taking that holistic life-cycle view just gives us a more robust business case.”
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