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Boeing Pushes Sales of Sub-Hunting 737 Ahead of Engine Decision

Boeing Co. (BA) is urging governments to buy new 737-based military aircraft “sooner rather than later” as the commercial version of the plane faces a redesign in a few years or retirement next decade.

The planemaker’s review of the 737, the world’s most widely flown airliner, may affect production of the P-8 variant used as a submarine hunter, Vice President Chuck Dabundo, the program manager, said yesterday at a briefing in Seattle, where Boeing’s commercial operations are based.

Boeing is considering a mid-decade redesign to fit new, larger engines for the 737 to compete with the upgraded Airbus SAS A320neo. The company has said it may instead develop a new narrow-body jet in about 2019 or 2020, then discontinue the 737 a few years later. Boeing’s defense unit is presenting the 737 as a replacement for military jets based on older commercial planes such as the 707.

“For the customer base we see in the near-term, we’ve got coverage there,” Dabundo said. “It’s the folks thinking about it, looking into the mid- to late-20s, we’re encouraging them to get on board sooner rather than later.”

Boeing has orders for the P-8 surveillance plane from the U.S. and Indian navies. The U.S. Defense Department has requested $3 billion in the fiscal 2012 budget to fund 11 P-8A planes and buy advanced parts for 13 jets next year. The U.S. Navy has said it needs a fleet of 117 P-8s, which would extend the program through early next decade, according to Boeing. Of the eight P-8s sold to India, the final assembly for the first one began last month, and the last one is due to be delivered in 2016, Dabundo said.

Global Potential

Boeing said it may sell as many as 75 P-8 surveillance planes to Australia, Canada, Saudi Arabia, Norway and Italy. The planemaker aims to boost overseas defense sales to 25 percent of the total by 2015, from 17 percent last year, as the U.S. contemplates cuts in military spending.

The company is also trying to extend the P-8 and the 737 platform into other roles and missions. Boeing is working on a proposal, for example, to sell the U.S. Air Force a ground surveillance version of the Navy’s sub-hunting P-8.

Boeing also uses the 737 for an Airborne Warning & Control System aircraft for Australia, Turkey and South Korea, and aims to sell that plane to India, Japan and the United Arab Emirates.

Decision Points

Commercial customers’ needs will drive Chicago-based Boeing’s engine decision, and then the Navy will have to decide what it wants, Dabundo said.

Boeing might be able to keep building the old plane alongside a revamped model if the Navy doesn’t want to switch, he said. The new engines would require changes to the plane’s fuselage and landing gear.

The company created a new manufacturing process for the P- 8, benefiting from work done to streamline production of the 737. Previously, the defense unit took commercial planes and cut them apart to turn them into military derivative aircraft.

The P-8 is built in the same plants as the 737 with features such as thicker fuselage skin, no windows, bomb bays, and stronger wings to hold missiles. The plane is then sent to a different site in Seattle, a few miles away from the 737 plant, for weapons and other systems to be added.

To contact the reporter on this story: Susanna Ray in Seattle at sray7@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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