Boeing (NYSE: BA) is apparently trying to persuade customers to consider signing up for its next 737 MAX model, which would be a further stretch of the MAX9.
Here's what we know about the MAX10:
- 66 inches longer than the MAX9
- Single class passenger capacity up to 230
- Slightly higher MTOW
- Uses the same LEAP-1B Engine
- Trailing-link main gear
- Entry into service approximately 2020
This aircraft appears to offer better performance than the MAX9. Specifically, the MAX9 like the 737-900ER has a greater chance of a tailstrike at takeoff because it is low to the ground. The MAX10, with higher landing gear would not have this challenge. Improved runway performance is a very useful feature and is worth chasing.
Boeing wants to try to slow down Airbus (OTCPK:EADSF)(OTCPK:EADSY). Airbus has a very successful aircraft in the same segment known as the A321neo. Increasingly this model is becoming the star of the A320neo family. Airbus believes this model will account for half their single aisle program sales. We concur. The A321neo also comes in a even more capable model, the A321LR with a ~4,000 mile range.
Both Airbus and Boeing are chasing the Boeing 757 replacement market. The 757 has become a benchmark because, even though they stopped making it years ago, it still does the kind of work no other airliner has been able to match. It has trans North Atlantic range, for example, which allows operators to run services between small cities and open new markets. It has great range (4,000 miles) and excellent capacity (180 seats).
While Airbus has made a determined effort to make the A321neo a 757 replacement, Boeing has felt the 757 replacement market is limited thinking. While Boeing vacillated, and thought the 737 MAX9 could accomplish the job, Airbus' A321neo outsold the MAX9 by five to one.
Clearly the MAX9 was not doing what Boeing thought it would. Developing a better MAX required the usual tradeoffs - capability, price customers will pay and development cost. The MAX10 represents a decision to ensure lowest development cost, offering quickest entry to service and, perhaps, not quite the performance of an A321neo.
While many think this tradeoff means Boeing has a less capable aircraft, we suggest they made the right tradeoff. Where we think Boeing needs to focus now is switching their MAX9 customers to the MAX10. This process provides the MAX10 with instant critical mass. Then MAX10 is going to be a more capable aircraft than the MAX9 and therefore a better competitor to the A321neo.
The critical agenda for Boeing is to ensure no, or limited, customer defections to the A321. That means American (NASDAQ:AAL), Delta (NYSE: DAL) and United (NYSE: UAL) who are all big 757 users, can be kept on side with the MAX10. American and Delta have already shown a preference for the A321. United is thought to be interested.
The big three US airlines are rich pickings for Boeing and therefore a source of intense focus. The rapidly changing market, with the likes of Lion Air and Norwegian growing fast and looking at longer range flights also draw Boeing's attention.
In conclusion we think Boeing should press forward with the MAX10. It is a better aircraft than the MAX9 and should see greater market acceptance.
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