During the Farnborough Airshow, Boeing (NYSE:BA) announced that it will be stretching the design of the Boeing 737. In this article, I will explain why this will not make a big difference for the smallest member of the MAX family in terms of order inflow. Additionally, I will explain why not stretching the -700, coming from the Boeing 737-300, was a mistake.
Boeing 737 Original Series
The commercial members of the Boeing 737 Original series are the Boeing 737-100, -200 and -200C. The -100 entered commercial service with Lufthansa in February 1968 and could carry 85 passengers in 2-class configuration. The -200, a stretch of the -100, could carry between 97 and 102 passengers in 2-class configuration and entered commercial service in April 1968 with United Airlines. Boeing sold a total of 1125 to commercial airlines: 30 737-100s and 1095 737-200s. The smallest member of the 737OS only had a market share of 2.7%.
Table 1: Deliveries and share division for the Boeing 737 Original Series
Boeing 737 Classic
The Boeing 737 Classic was the successor of the Boeing 737 Original Series and consisted of the Boeing 737-300, -400 and -500. The -300 entered service with USAir in November 1984 and could carry 128 passengers. The -400, a 10ft stretch of the -300, could carry 146 passengers and entered service in September 1988 with Piedmont Airlines.
The -500 was a shrink of the -300 and was developed on customer demand to replace the Boeing 737-200 by an airplane with better fuel economics. In February 1990, Southwest (NYSE:LUV) became the first operator of the -500, which could carry up to 108 passengers.
Table 2: Deliveries and share division for the Boeing 737 Classic
What should be noted is that the -500 was the smallest member of the Classic family and accounted for 19.6% of the deliveries. The -300, the baseline model, represented 56% of the deliveries with the remaining 24.4% for the 737-400.
Boeing 737 Next Generation
The Boeing 737NG was the biggest change to the 737 family to make it competitive with the Airbus (OTCPK:EADSF) A320. The family consisted of -600, -700, -800, -900 variants. The -700 was the first model to enter commercial service and can carry up to 126 passengers. The -800, a fuselage stretch of the -700, entered service in 1998 and could carry up to 162 passengers. The -900 entered service in 2001, but lacked competitive strength and was ultimately replaced by the -900ER which can carry up to 178 passengers. The -600, a shrink of the -700, entered service in 1998 and carried 108 passengers. This made it a direct replacement of the Boeing 737-500. The -600 was eventually eliminated as there was little to no demand for the airframe.
Table 3: Deliveries and share division for the Boeing 737 Next Generation
What can be seen from Table 3 is that the smallest member of the NG family had a share in the orders of only 1%. The base model had a share of almost 18%, the stretch has a 73.1% share and the double stretch has a share of 8.1%.
Boeing 737 MAX
The MAX family is Boeing's answer to the Airbus A320neo to retain market share. The MAX 8 and MAX 9 are configured to carry more passengers, while the 7 MAX would initially seat as many passengers as the -700.
Table 4: Deliveries and share division for the Boeing 737 MAX
An important conclusion that can be drawn is that the smallest member of each 737 generation always was the slowest seller. In total the smallest members of all families combined hauled in only 4% of the total orders. The same counts for Airbus, where its smallest member of the narrow body family hauled in just 1% of the total orders. Observing the trend of small members being bad sellers it can be said that the addition of extra seats won't strengthen the MAX 7 business case, but that is something Boeing already acknowledged. Boeing said the move to add more seats on the Boeing 737 MAX 7 was driven by customer wishes. AeroAnalysis, however, believes that this move has more to do with the existing and upcoming competition from Bombardier's (OTCQX:BDRAF) CSeries.
The biggest mistake Boeing actually made is that they did not stretch the -700 from the start, but chose for it to be a -300 replacement. In my view, that is an irreversible mistake that plays Boeing parts in its competitive battle with the Airbus A320 families.
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Disclosure: I am/we are long BA.
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