Boeing Ponders Transcontinental Plane to Replace 757
Boeing Co. (BA) is gauging airlines’ appetite for a new medium-size plane for transcontinental flights within the U.S., the market that includes the most-lucrative routes for domestic carriers.
Some customers have already shown interest in such a jet, John Wojick, the sales chief for Boeing Commercial Aircraft, said yesterday in Singapore. Boeing isn’t in position to start work on the project immediately, said Scott Fancher, the planemaker’s head of aircraft development.
A mid-range aircraft would fill a gap left when Boeing’s 757, the longest single-aisle airliner, went out of production in 2004. U.S. transcontinental service includes the New York-to-Los Angeles trips prized by airlines because of the demand for premium seats, and Airbus Group NV (AIR) is trying to win orders by extending the range of its A321.
“It’s the niche which has the oldest airplane serving it, and it’s the niche that we don’t cover with our current offerings,” Fancher said in an interview at the Singapore Airshow.
U.S. airlines operate 70 percent of the 819 Boeing 757s still in service, according to Ascend Worldwide data compiled by Bloomberg Industries. Europe’s airlines and freight haulers fly 19 percent of the global 757 fleet, while a handful of the aircraft serve the Middle East.
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The market segment may be too small to make replacing the 757 a priority for Chicago-based Boeing, especially since Middle Eastern and Asian carriers favor larger jets to ferry travelers between population centers, said George Ferguson, a senior analyst with Bloomberg Industries in Skillman, New Jersey.
“Herein lies the problem with 757s,” Ferguson said in a telephone interview. “If you assume that the addressable market for the 757 are people that are holding it already, you have a market that’s a little bit less than 1,000 planes.”
Boeing introduced the 757 in 1983, and the jet is typically set up to seat as many as 280 people in a one-class cabin, according to the company’s website. Its maximum range is about 3,900 nautical miles (7,200 kilometers), for the -200 version.
Carriers such as United Airlines and Delta Air Lines Inc. have been ordering Boeing’s 737-900ER and Airbus’s A321-200, which seat as many as 220 passengers, to take over some flying once handled by the versatile 757, Douglas Runte, a Deutsche Bank AG analyst in New York, said in a Feb. 4 research note. Those planes can fly about 3,200 nautical miles.
“There is ample demand for an aircraft a notch or two above these two variants in size and slightly longer in range that would be positioned where the 757-200 and 757-300 used to sit,” Runte said in an e-mail. “An all-new aircraft in this size or even slightly larger would allow the company to optimize passenger capacity and range and even potentially adopt an interesting interior layout.”
Delta, the biggest 757 operator, and American Airlines Group Inc. (AAL), the third-largest, declined to comment on any discussions with Boeing, spokesmen said.
Boeing engineers are occupied with the development of the twin-aisle 777X and narrow-body 737 Max, both of which are upgrades of existing models, as well as two stretched 787 Dreamliners. The 777X is due to enter service by the end of the decade while the Max is set to begin commercial flights in 2017.
Airlines have used the 757 in ways that Boeing hadn’t envisioned, including crossing the U.S. and flying from the East Coast to parts of Europe, Fancher said. Boeing must think hard about what a successor would do, he said.
“First question is, how big is the market, and then, what size plane, what range, what operating economics and characteristics,”Wojick said in Singapore. “We’re studying that, like the other guys are.”