Boeing Board Weighs 737 Upgrade Next Week

(Corrects ninth paragraph of story published Aug. 26 to remove outlook for conversions of existing 737 orders.)

Boeing Co. (BA) has customers lined up for an upgrade of its best-selling 737 with more fuel-efficient engines as it awaits board approval for the project as soon as Aug. 29, the planemaker’s business-development chief said.

Demand should be similar to that for the new A320neo from Airbus SAS, Nicole Piasecki said today in an interview. Airbus decided in December to update its single-aisle jet with new engines and racked up more than 1,000 orders and commitments within seven months as airlines scrambled for production slots.

“We’re heavily engaged with customers across the world right now who are excited about the product,” Piasecki said. “A lot of our customers are going to want to get access to it as fast as possible. That dynamic will exist for us in the same way it existed for Airbus.”

Boeing’s board is scheduled to meet Aug. 28 and 29 in Chicago, the corporate headquarters, and will consider management’s decision last month to offer new engines on the 737 rather than wait to develop an all-new single-aisle plane that wouldn’t be ready until the end of the decade.

The redesigned 737 would officially be launched this fall and enter service mid-decade. Airbus plans to start delivering its neo in 2015.

American Order

The 737 upgrade makes up half of the 200-jet order Boeing won from American Airlines in late July. The Fort Worth, Texas- based carrier split its purchase of 460 aircraft between the U.S. company and Airbus. That broke American’s exclusive arrangement with Boeing since 1987, compelling the planemaker to shift from its stated preference for an all-new jet.

Piasecki said Boeing is still working with carriers on changes to the 737, the world’s most widely flown plane. The only engine option will be the Leap-X from CFM International, a partnership of Safran SA and General Electric Co. (GE)

Engineers have been trying to devise an engine-fan size for the new 737 that will be bigger than the current ones, to reduce fuel consumption, while still small enough to minimize changes to the plane’s fuselage, which sits low to the ground.

Boeing still expects to sell more of its current 737s, though it also will work with customers should they want to convert their orders into contracts for the model with new engines, she said. Boeing beat Airbus this week for an order for 100 737-900ERs from Delta Air Lines Inc.

Boeing climbed $1.70, or 2.8 percent, to $62.80 at 4:15 p.m. in New York Stock Exchange composite trading, the largest increase on the Dow Jones Industrial Average.

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

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

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