AA Order Includes B737s With 'New Engines'

It hasn't escaped the attention of analysts that the recent massive order by American Airlines for at least 460 new airplanes mentions Boeing 737s with upgraded engines.

For more than a year, Boeing has been discussing ... some say dithering over ... whether to re-engine its workhorse medium-haul airliner as Airbus did with the A320neo ... or put pen to paper to bring an entirely new airplane to market. The AA order, along with the number of A320s ordered at the Paris Air Show, may have forced Boeing's hand. The French News Service AFP reports that analysts are saying the decision to upgrade the 737, rather than wait for an entirely new airplane, was necessary given the competition from the A320neo. Richard Aboulafia of the US Teal Group said the decision saved the U.S. planemaker from a "serious disaster." But he also said it showed that Boeing is still an agile company able to respond to market demands.

Kepler Capital Markets' Christophe Merard said that what is still to be determined are the specs of the re-engined B737. The landing gear on the Boeing are shorter than on the A320, and Menard said that the company will have look at how to extend the gear to accommodate new engines under the wings. But he said even given the technical challenges, it will be less expensive than designing a clean-sheet airplane.

FMI: www.boeing.com