Oct. 21 (Bloomberg) -- Boeing Co. said it favors an all-new 737 single-aisle jet over an upgrade of the existing version and is studying whether to add more seats to help reduce carbon emissions per passenger.
“Our job is to improve the operating efficiency,” Jim Albaugh, chief executive officer of Boeing Commercial Airplanes, said yesterday after the company reported earnings. “Re-engining is one way to do it, but quite frankly the business case for re-engining is not as compelling as we’d like to see.”
Boeing and European rival Airbus SAS are weighing the merits of an upgrade for their best-selling planes after pushing back plans to develop new models, saying engine technologies aren’t ripe. Boeing will decide by early next year and Airbus has promised a decision within two months.
Albaugh said adding capacity is an issue that Boeing is now studying for the 737 model. The “sweet spot” is for a plane able to carry 150 or more passengers, he said. Current 737s go from 110 to 190 seats, using either stretched or shrunken versions of a plane optimized for about 150 seats.
While raising the seat count to a range of 150 to 220 would create a more efficient family of the 737, the move risks exposing a flank to makers of smaller planes. They include Bombardier Inc.’s CSeries, which will seat 110 to 145, or Brasil’s Embraer, which is studying a 130-seat plane. Stretched aircraft have higher profit margins and sell better than shrunk versions, as the smaller jets are proportionally heavier.
Environmental issues are an argument for “up-gauging” the 737, Albaugh said in a telephone interview. China’s Comac, which is building a challenger to the 737 and Airbus’s A320, is optimizing its planned C919 around a 168-seat model.
“The bigger the plane, the more profit margin they get,” said Ian Massey, director of Kenobi Ltd., an independent consulting company in the U.K. Boeing and Airbus, which is also looking at a successor to the A320, may optimize around aircraft with 175 or 180 seats, giving jets ranging from 150 to 250 passengers, he said.
Albaugh said that even as Boeing considers how it might best position a new plane, the Chicago-based company hasn’t ruled out a move to offer new engines on the existing planes.
“We haven’t made a decision,” Albaugh said.
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