Boeing Launches New Plane as Rivalry With Airbus Continues -- Update

06/19/17 05:59 AM EDT
By Robert Wall 

LE BOURGET, France-- Boeing Co. Monday formally launched a new version of its single-aisle jetliner to regain market share lost to rival Airbus SE.

The plane, called the 737 Max 10, is the largest of Boeing's new narrowbody planes that represent the backbone of global air travel. "Our customers told us to build it bigger," said Kevin McAllister, president of Boeing Commercial Airplanes.

Mr. McAllister said more than 10 customers have already committed to buying the plane. The deals, to be unveiled this week at the Paris Air Show, will be for more than 240 aircraft.

The plane carries a price tag of $124.7 million each, though buyers get discounts. It should enter service in 2020.

Boeing lined up a list of plane leasing companies to underpin interest in the new jetliner. Lessors have become increasingly important customers for plane makers.

General Electric Co.'s plane leasing arm, known as GECAS, signed an order for 20 of the planes. BOC Aviation, another plane leasing firm, signed a memorandum of understanding to take 10 of the planes, Boeing said, and China's CDB Aviation signed an agreement also for 10 of the new planes, as well as 42 other 737 types and eight 787 Dreamliners. Travel company TUI Group is converting 18 Boeing single-aisle planes already ordered to the new model.

Big single-aisle planes have become a sweet-spot for buyers. They cost far less than larger widebody planes and can fly attractive routes such as U.S. coast-to-coast or even some shorter trans-Atlantic hops. "We see a lot of interest from our customers," said Peter Barrett, chief executive of plane lessor SMBC.

Airbus has had a lead on Boeing in this growing and increasingly important plane segment. Around 65% of the European aircraft maker's single-aisle deals last year were for the largest version. Airbus began to deliver its rival A321neo planes to airline customers in April and has won 1,416 orders through May for its model.

Airbus plane boss Fabrice Brégier Monday said the company's biggest single-aisle will likely represent half of all narrowbody deliveries. He said even in the face of Boeing's new plane, Airbus would maintain a market-share edge. The European plane maker announced its own GECAS deal for 100 single-aisle planes.

Boeing, with its largest competitor, had won less than 200 orders before the introduction of the 737 Max 10. Now the U.S. plane maker is striking back.

Big narrowbodies are particularly important for future profits. Boeing and Airbus can charge a premium for the planes that are slightly larger and can hold more passengers even though they cost only a little more to produce. Airlines prize the models with added seats because it allows them to spread costs over more passengers, typically boosting returns when planes are full.

Boeing's Max 10 can seat up to 230 passengers. The Airbus plane can fit 240 passengers.

Mr. McAllister said the new plane will come with relatively low extra development costs because of its similarity to smaller versions.

Airbus isn't ready to cede its lead, though. Even ahead of the Boeing announcement, John Leahy, chief plane salesman at Airbus said his rival product will have greater range and lower per-seat costs. "They do have a slightly lower price on their airplane," he said, "but you get what you pay for."

Write to Robert Wall at robert.wall@wsj.com

 

(END) Dow Jones Newswires

June 19, 2017 05:59 ET (09:59 GMT)

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