More than a decade ago, Boeing executives made a defining decision: To keep up with the company’s main rival, Airbus, they abandoned the idea of developing a new plane and raced to update the 737, its most popular jet. company.
That effort culminated with the 737 Max, which had two fatal crashes in 2018 and 2019 and drew more scrutiny this year when a panel exploded from one of the planes during a flight in January. The plane’s problems have left Boeing behind Airbus in the global single-aisle plane market, which it once dominated.
Now Boeing, which is expected to name a new chief executive by the end of the year, must make another critical choice: When should it develop its next all-new plane?
If the company gets it wrong, it could spend billions of dollars and lose market share to Airbus, which is based in Toulouse, France. Both manufacturers also face a distant but growing threat from China and growing pressure to cut global-warming emissions.
“This will be one of the most important decisions for whoever takes on the role of CEO,” said Ken Herbert, aerospace and defense analyst at RBC Capital Markets. “Their legacy will be determined by what they do with the portfolio.”
Boeing declined to comment for this story.
Commercial airplanes are generally divided into two groups. Narrow-body or single-aisle aircraft such as the 737 typically carry 100 to 200 passengers on domestic US flights. Wide-body or twin-aisle planes can carry more passengers farther—from, say, New York to London or Tokyo.
Boeing and Airbus sell many more narrow-body jets, but airlines are demanding ever-larger versions of these planes because of limited gate and runway capacity at many airports and growing demand for travel.
The Max was designed to compete with the Airbus A320neo family of aircraft. Experts say the verdict in this competition is clear: Boeing lost. Airlines around the world have ordered many more of the Airbus aircraft, especially the largest, the A321neo. The European company’s lead was cemented after the Max crashes — which experts blamed on poor design and engineering decisions — and the plane’s subsequent 20-month global ban.
In 2019, for the first time, Airbus had more passenger planes flying around the planet than Boeing, according to Cirium, an aviation data provider.
The Max remains popular, especially with airlines in the United States, which have a long history of flying Boeing planes. The company is working to fill about 4,300 orders for the Max, a backlog of hundreds of billions of dollars. But Airbus has sold much more than the A320neo family, with more than 7,100 outstanding orders for the three variants of that plane.
Boeing still leads the way in the largest twin-aisle planes, but Airbus’ dominance of the lucrative single-aisle market could prove self-reinforcing, experts said. With more sales to come, Airbus can invest more in research and development. With more planes flying, he can earn more from selling parts and providing service.
“All the while Boeing was running around putting out fires, Airbus was just running its business,” said Ron Epstein, an aerospace and defense analyst at Bank of America.
Boeing has also squeezed everything it can out of the 737, which debuted in the late 1960s. In developing the Max, the company pushed that plane’s structure to its limits. Its next plane is likely to be one it builds from scratch, aviation experts said.
It was unclear what this new jet might look like or when it might arrive.
Dave Calhoun, Boeing’s chief executive, said the company won’t launch a new plane until the mid-2030s — in part because such a monumental effort would only be worthwhile when companies like General Electric, Rolls-Royce and Pratt & Whitney introduced more efficient engines.
But building a new plane could help Boeing fill a major gap in the market for larger narrow-body jets, some experts said.
Airbus’ most popular plane, by far, is the A321neo, which has the most seats and can travel the farthest of the company’s three neo models. Boeing’s answer to that plane, the 737 Max 10, doesn’t fly far enough and has yet to be approved by regulators.
Bank of America’s Mr. Epstein estimated last year that Boeing could sell 6,500 of the larger single-aisle jets to airlines, mostly to replace smaller narrow-body planes. That jet could be developed in seven to eight years for an investment of up to $20 billion, with Boeing generating at least five times that in gross profit, he said at the time.
Some aviation experts also argue that Boeing and Mr. Calhoun were too cautious about committing to a new plane, which they said could be more efficient even without waiting for new engines. Newer materials, different types of wings and other developments could help Boeing achieve substantial improvements, they said.
“If you offer the airlines a good enough plane, they will take it,” said Michel Merluzeau, an analyst at AIR. aerospace and defense consulting firm.
The longer it takes Boeing to build a new plane, some said, the more Airbus has to extend its lead. And while the new engines promise big performance gains, in practice they can fall short. Airlines may also be reluctant to buy planes powered by these engines, especially after problems with the current-generation engines, which have required more and longer repairs than expected.
But others said Boeing would be wise to wait. If the company moves too soon, Airbus could enter with an even newer, better aircraft.
Most analysts expect Airbus to launch a new plane in the middle of the next decade, around the same time Mr. Calhoun has targeted. Aviation experts disagree on whether Airbus should move first or wait to follow Boeing, but say the European manufacturer is well-positioned for either approach.
Developing a new airplane is a huge undertaking. Unlike wide-body planes, narrow-body jets are sold in larger numbers and therefore must be churned out quickly. Boeing and Airbus aim to produce dozens each month. To achieve this pace, Boeing will have to develop a complex production system and prepare its suppliers. Airlines would also have to be willing to train pilots for a new jet, a costly and time-consuming process.
Ultimately, any new plane will also have to last for decades, Mr. Calhoun said in an interview with Aviation Week, a trade publication, last year.
“Twenty years is a disaster. 30 years is a disaster,” he said. “They have to last 50 years.”
Of course, Boeing wouldn’t be starting from scratch. The company and Airbus are constantly developing and releasing new techniques, technologies and tools. Boeing can apply lessons learned elsewhere, for example, in the development of the wide-body 787 Dreamliner, which it first delivered to an airline in 2011, or the upcoming 777X, a more efficient version of an existing wide-body plane of Boeing whose wing the company will make at home with composite materials.
The company is also working on experimental technologies. With NASA, Boeing is developing a longer, thinner truss-braced wing, a design known as the Transonic Truss-Braced Wing. It also maintains a research program known as the ecoDemonstrator, which uses modified airplanes to test new technologies. Both Boeing and Airbus are separately experimenting with using sustainable fuels, which can be made from used cooking oil, waste, corn and other materials.
Aviation experts said building a new plane could generate new excitement for the company after its recent troubles.
“If they can make it easier for people to like them, I think they’ll find there’s a lot of support out there for a new, improved Boeing,” said Rob Stallard, an analyst who covers both Boeing and Airbus at Vertical. Research Partners.
