Some Boeing customers see a hole in its lineup of passenger jets and are pushing for a new midsize model to fill it. But a $500 billion backlog and development of other planes may keep that idea from getting off the ground anytime soon.
The world’s largest aerospace firm ended production of its 200- to 250-seat 757 in 2004 due to waning demand and expectations that the latest, narrow-body 737s would serve that market.
Most of the 1,100 single-aisle 757 jets that were made are still in service. Primary users include United Continental, American Airlines and Delta Air Lines.FedEx still uses a cargo version of the 757.
The industry is watching closely to see whether Boeing will replace the versatile 757 because the new A321neoLR from archrival Airbus fits that segment and recently drew a 30-plane deal from leasing giant Air Lease.
But prospective customers will have to wait.
A Lot Harder Than Lego
“Everybody thinks building an airplane is like putting together Lego blocks,” Jefferies analyst Howard Rubel told IBD. “But it’s a lot harder than that, and discussion (of a proposed model) sometimes goes on for several years.”
Sterne Agee analyst Peter Arment also doubts Boeing will unveil a 757 replacement in the next few years, because it has other planes that cover part of that market. He adds that Boeing’s hands are full with other work.
Boeing is ramping up output of its 787 Dreamliner after working out technical glitches, while also developing next-generation versions of the 737 and 777. Demand remains hot for the 737 and production is speeding up.
But by the beginning of the next decade, Arment thinks, Boeing will easily have the resources to handle a new midsize plane without harming its financials.
If Boeing does make a 757 replacement, the plane could be lucrative, as it likely would incorporate new technologies used in the fuel-efficient 787, he added. The newest 787 uses lighter composite materials for more than 50% of its structure.
“That most likely looks like a light, twin-aisle with efficiency that would satisfy the market,” he said. “That would be a category killer and a big seller.”
After some delays, cost overruns and early malfunctions on the 787, Boeing seems reluctant to start new aircraft programs.
Last year, CEO Jim McNerney said Boeing won’t pursue risky “moon shots” and instead will take incremental steps in developing commercial jets, mimicking Apple’s product strategy.