New Pilots

Boeing shows off first 737 MAX as Airbus surges ahead on orders

2015 12 07

Boeing recently showed off its newest jetliner, a second major revamp of the workhorse 737 it introduced 50 years ago, amid signs that demand for the fuel-efficient jetliner may be ebbing.

At its Renton, Washington, factory, Boeing showed media the second 737 MAX to be built and a new assembly line in a no-frills ceremony marking a major milestone in the jet's development. Employees and guests will soon see the first finished plane parked outside the factory.

The latest version of Boeing's best-selling 737 introduced in the mid-1960s is due to make its first flight early next year and reach customers in 2017. It will burn an estimated 14 percent less fuel per seat than current 737s and fly farther, allowing airlines to open new routes.

But the plane faces a formidable adversary in the A320neo plane from European rival Airbus. Both plane makers face challenges to sell their fuel-efficient planes as oil prices remain far below the levels when both of the new jets were initially offered to customers.

Boeing has pledged to close a sales gap with the A320neo, saying it is too early to judge the balance of power between the two models and only deliveries will decide which has the upper hand.

On Monday, Airbus released sales figures showing the A320neo had captured 60 percent of the market, tipping the typical near-50-50 split sharply in its favor.

Plane makers generate revenue from sales from spare parts and support, as well as further aircraft orders. Airlines, particularly low-cost carriers that are big buyers of the single-aisle 737 and A320, often fly one aircraft type to help reduce operating expenses.

As Airbus gobbles up market share, that reduces Boeing's future sales prospects.

So far this year, Boeing has garnered 292 orders for the 737 MAX family, compared with 781 in the same period last year.

By comparison, Airbus said it booked 825 orders for the A320neo family in the first 11 months of the year, compared with 782 in prior-year period.

Airlines are planning to use the 737 MAX on new routes. Norwegian Air Shuttle, for example, said it will use the first 14 of its 737 MAX planes on trans-Atlantic routes connecting perhaps a dozen cities. Half of those routes are being flown by other carriers using larger 757 and 767 aircraft, Thomas Ramdahl, the airline's chief commercial officer, said in a recent interview.