A Boeing 737 Max, a 787 Dreamliner and an Airbus A380 on display at the Paris Air Show in Le Bourget, France, in 2017. (AP Photo/Michel Euler)

A Boeing 737 Max, a 787 Dreamliner and an Airbus A380 on display at the Paris Air Show in Le Bourget, France, in 2017. (AP Photo/Michel Euler)

Boeing says decision on new airplane will come this year

With the 737 Max crisis far from over, there was speculation that a 797 decision might be delayed.

EVERETT — The Boeing Co. will decide by the end of the year whether to offer an all-new airplane, the aerospace giant told The Daily Herald.

It was the first definitive statement on the timing of a decision since the 737 Max crisis began in March.

Even aerospace analysts were uncertain how Boeing would proceed with a decision on the new “middle-market” airplane, informally dubbed the 797.

Since a second 737 Max crash March 10 led to the model’s grounding, there has been speculation that Boeing might defer a decision on a new passenger jet until next year or even later.

However, Boeing said Friday it would stick to the time frame promised Jan. 30 by CEO Dennis Muilenberg, before the Max grounding — that a board of directors decision on the new airplane, sometimes called the NMA, would be made in 2019.

Boeing spokesman Paul Bergman said in an email: “Our focus is on returning the 737 Max to service, however, we are still working through the NMA business case and once we complete that work, we will make a decision this year on whether to offer the airplane. If we decide to offer the airplane and the market responds positively, we will proceed with a launch decision sometime in 2020.”

Before the 737 Max grounding, many assumed the new 797 would be announced at the Paris Air Show the week of June 17-23. A coalition of elected officials, businesses and unions created by Washington Gov. Jay Inslee was anticipating a big reveal. But that was before two 737 Max crashes, just five months apart, in Indonesia and Ethiopia. In all, 346 people died.

Richard Aboulafia, a prominent aerospace analyst and vice president of the Teal Group of Fairfax, Virginia, said of Boeing’s response: “It seems to imply that the NMA is still on the front burner. This year needs to be it for the decision, then.”

The Choose Washington New Middle-Market Airplane Council hopes to convince Boeing to build the new passenger airplane in Washington, maybe even Everett.

Boeing and rival Airbus have long used the Paris Air Show, held every other year, as a forum to announce new planes and to tout multibillion-dollar sales. At the 2017 air show, Boeing first openly discussed the possibility of the “middle-market” 797.

Its reputation tarnished, Boeing’s profile at the air show this year is likely to be a humble one. The company now faces multiple government probes and a criminal investigation into the design and certification of the Max, which is built in Renton. The 797 isn’t expected to be the main event, if it’s mentioned at all.

The Choose Washington new airplane council is also likely to shift focus from the 797 to broader promotion of the state’s aerospace sector.

Robin Toth, head of the governor’s Office of Aerospace, said the council believes the 797 “is still something the company” will consider offering.

Scott Hamilton, a Bainbridge Island-based aviation analyst, expects Boeing will make its decision after the Max is returned to service. That’s estimated to be late summer or fall.

In the meantime, deliveries of the grounded 737 Max have ceased, and so has that revenue stream. So far, Boeing has factored in more than $1 billion in costs associated with the plane’s grounding. The company recently sold $3.5 billion worth of bonds and secured a $1.5 billion line of credit to ensure it has enough cash.

A Boing 737 Max 9 during a demonstration flight at the Paris Air Show in Le Bourget, France, in 2017. (AP Photo/Michel Euler)

A Boing 737 Max 9 during a demonstration flight at the Paris Air Show in Le Bourget, France, in 2017. (AP Photo/Michel Euler)

Chief Financial Officer Greg Smith said last month that he expects financial results “to continue to be adversely impacted until we safely return the 737 Max to service, ramp up production rates and resume deliveries to customers.”

The Max was the latest generation of the five-decade 737 product line. Some notable parts of it were redesigned, and it has larger engines. But to the untrained eye, the Max looks like any other 737, and it was relatively inexpensive to develop.

The 797, on the other had, is to be Boeing’s first “clean-sheet” airplane — an all-new design — since the 787 program was launched 15 years ago.

The 797 would fit somewhere in size between the current 737 Max 9 and the smallest Dreamliner, the 787-8 — the middle of the market in terms of passenger capacity. It would fill a void left when the Renton-built 757 was discontinued in 2004.

In a survey this spring of airlines and airline leasing companies, Jefferies Financial Group, a New York investment firm, found that executives wanted “a replacement for the 757 or 767 or ultimately a down-sized 787.”

A middle-market plane would have 200 to 270 seats and a range of about 5,000 nautical miles, on average 1,500 miles more than the 737 Max variants.

Over the next two decades, demand for medium-sized aircraft that can accommodate up to 300 passengers, which is where the 797 would fit, is estimated to be worth roughly $1.5 trillion, according to an aviation market forecast. Boeing anticipates a demand for 4,000 to 5,000 of those airplanes over the next 20 years.

In the meantime, Boeing needs to resume selling and delivering the 737. The narrow-body, single-aisle workhorse accounts for about 70% of Boeing’s commercial aircraft production and was expected to be replaced 10 years ago. But that was before Airbus unveiled the more-fuel-efficient A320neo at the 2011 Paris Air Show, threatening the 737.

An Airbus A320neo takes off for its first test flight at Toulouse-Blagnac airport in France in 2014. (AP Photo/Frederic Lancelot)

An Airbus A320neo takes off for its first test flight at Toulouse-Blagnac airport in France in 2014. (AP Photo/Frederic Lancelot)

The Max — with larger, more-fuel-efficient engines than the 737 NG family — was a swift refresh of the model to counter the advantages of the A320neo.

But that refresh included modifications, like the engines, that changed the aerodynamics. To make the 737 Max handle the same as the 737 NG, and to prevent some aerodynamic stall situations, Boeing added what’s known as the Maneuvering Characteristics Augmentation System (MCAS) — behind-the-scenes software which now is suspected in both Max crashes.

For some, the need for that modification is a sign the 737 is maxed out and will need to be replaced sooner than expected.

Kevin Michaels, managing director of the Michigan-based consultancy AeroDynamic Advisory, doesn’t believe Boeing will accelerate development of a 737 replacement.

“The 737 Max is a fundamentally excellent aircraft that had a flaw designed into it,” Michaels said. “Boeing will fix the flaw but needs to regain public trust. Fortunately, it has a massive backlog of some 5,000 aircraft.”

Hamilton, the Bainbridge aerospace analyst, doesn’t believe Boeing will expedite a replacement for the 737 because it could impinge on future revenue — from the Max.

“You can’t accelerate the 737 replacement … without trashing sales of the Max. Max sales will recover in time, and Boeing doesn’t want to kill this cash cow prematurely,” Hamilton said.

Aboulafia predicts the last 737 Max will be delivered in 2030.

Analysts thought the 797, meanwhile, could be delivered around 2025. If it is any later than that, the 797 program and development of a 737 replacement would be uncomfortably close.

Developing both at the same time “isn’t doable,” said Aboulafia. “There’s no way in terms of company resources they can do that. They can’t do both.”

Analyst Hamilton said Boeing CEO Dennis Muilenburg “has been clear there won’t be parallel airplane programs.”

Whatever happens to Boeing’s product line, Washington leaders intend to convince the company to build it here.

They have learned the hard way not to take Boeing’s presence for granted. In 2001, the company moved its corporate headquarters from Seattle to Chicago. In 2009, Boeing decided to build a second 787 assembly line in North Charleston, South Carolina — its first new commercial airplane factory outside Washington.

Richard Aboulafia, vice president of the Teal Group.

Richard Aboulafia, vice president of the Teal Group.

Aboulafia’s firm authored the Aerospace Competitiveness Economics Study, commissioned and paid for by Choose Washington last spring. The report ranked Washington the best state in the U.S. for aerospace manufacturing. Ohio, South Carolina, Kansas and Colorado were distant runners-up.

When Choose Washington, Gov. Jay Inslee and other state and local leaders announced the study’s results at an upbeat event in 2018, talk of the 797 and the 2019 Paris Air Show flowed freely.

In a strange twist, the Max crisis could help Washington land the 797.

Boeing is more likely to stick close to home and build the 797 in Washington than venture far afield or conduct a sweepstakes for a new factory site, Aboulafia said.

“It’s a question of trying to de-risk the problem and lower costs,” said Aboulafia.

At the Paris Air Show, Aboulafia expects the company will emphasize safety and the strength of its twin-aisle product line — the 787 and 777X.

“They might even announce a sale or two of the 777X,” Aboulafia said of the new Everett-built plane, which is expected to fly for the first time this year.

As for an all-new 797, announcing an offer this year “would serve Boeing well,” he said, and “send the message that they’re not just ‘Derivatives R Us.’”

Janice Podsada; jpodsada@heraldnet.com; 425-339-3097; Twitter: JanicePods

More in News

Dane Scarimbolo and Dominique Torgerson run Four Horsemen Brewery in Kent. They were almost shut down in late 2017 by King County, which after years of letting them operate a brewery and taproom, decided they were in violation of county code. Aaron Kunkler/staff photo
Proposed winery ordinance irks King County farmers, neighbors and businesses

Concerns include more traffic, higher land prices, code enforcement and compliance.

Balducci runs against Hirt for District 6 county council seat

The former Bellevue mayor is essentially running unopposed.

Washington Gov. Jay Inslee after speaking with reporters Aug. 22 in Seattle. (AP Photo/Elaine Thompson, File)
Lawmakers to governor: How dare you mess with our budget!

They want Jay Inslee to halt his planned $175 million reallocation of state transportation dollars.

“We are one,” King County Sheriff Mitzi G. Johanknecht said in regard to the recent teen deaths due to fentanyl overdose. Left: Sammamish mayor Christie Malchow, King County Sheriff Mitzi G. Johanknecht and Sammamish Police Chief Michelle Bennett. Madison Miller / staff photo
Two Skyline High School students die from fentanyl overdose

The Sammamish police department, city of Sammamish, school districts join forces to prevent future teen fentanyl deaths.

Coming down to the wire: Student MMR vaccine deadline approaches

Students have limited time to show compliance with new MMR vaccination law before being barred from school.

Bellevue is the most expensive place in the region to rent an apartment, according to a new analysis. Courtesy photo
Several Eastside cities are among most expensive to rent in Northwest

Bellevue topped the list for highest apartment rents during the first half of 2019.

Wendy Weiker and Jon Hanlon
Weiker and Hanlon seek Mercer Island City Council Pos. 3

Candidates share their views on budget priorities, transit development and more.

Swastikas found on Mercer Island during Jewish holiday

Meanwhile, a new community security group is training Jewish orgs how to protect against hate.

Most Read