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Technology Stocks : Boeing keeps setting new highs! When will it split?
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From: Eric1/29/2016 1:06:02 PM
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Boeing’s 737 MAX takes off on first flight

Originally published January 29, 2016 at 9:48 am Updated January 29, 2016 at 9:50 am

Latest Renton-built version of Boeing’s narrowbody jet carries with it the company’s hope for staying competitive with Airbus in the short-haul market .

By Dominic Gates
Seattle Times aerospace reporter

Just over seven weeks after it rolled out of the paint hangar, Boeing’s first 737 MAX — the “Spirit of Renton” — flew for the first time Friday, taking off from its namesake city at 9:48 a.m.

It carried Boeing’s hope and ambition to stay competitive against Airbus for the next decade in the bread-and-butter short-haul airliner market.

The jet is set to land about two and a half hours later at Boeing Field.

The latest — and surely the final — revamp of Boeing’s stalwart domestic 737 narrowbody jet that first flew in 1967, the MAX comes in three sizes, seating 126 to 220 passengers.

Its chief distinguishing feature is the pair of much larger engines. These have a fan diameter of 69.4 inches compared to the 61-inch diameter fan on the current 737.

With these latest LEAP engines from CFM International, along with improved aerodynamics — including new split wingtips — Boeing says the MAX design is 14 percent more fuel efficient than today’s 737.

The first flight begins more than a year of flight tests to achieve certification of the airplane by the Federal Aviation Administration (FAA) and then delivery of the first jet to Southwest Airlines in the third quarter of 2017.

Heated competition The MAX’s first flight comes just nine days after the first delivery of the rival Airbus A320neo to German carrier Lufthansa, underlining the fact that development of the Boeing jet is running more than 18 months behind its competition.

In addition to that head start, Airbus’s neo has consistently won more orders than Boeing‘s MAX, opening up a widening advantage for the European jetmaker in this market segment.

The current model 737s and A320s divide the market roughly 50/50. But at the beginning of this year, Airbus had firm orders for 4,471 neos compared with Boeing’s orders for 3,072 MAXs — a 59/41 market split.

Most of the Airbus advantage comes from the largest model of its neo family, the A321neo, which has more than 1,000 orders. The corresponding 737 MAX 9, which has just over 200 orders, simply cannot match that plane’s performance.

While that’s a big win for Airbus, the majority of orders are for the smaller Airbus A320neo or the Boeing 737 MAX 8 models, which is the part of the market that will ultimately determine the success of the MAX.

There, Boeing claims that it maintains a fuel-efficiency advantage on a per-seat basis over Airbus.

Future sales of the MAX will rest heavily on whether the flight tests in the coming year confirm Boeing’s fuel efficiency promise.

Renton factory The MAX also presents a manufacturing challenge, for which Boeing has marshaled impressive resources.

The Renton final assembly plant where the 737s are built has undergone a dramatic makeover aimed at lowering the cost and quickening the pace of production.

Boeing has automated the fabrication of the 737 wings by installing fastening machines designed by Mukilteo-based engineering firm Electroimpact and has shifted the fuselage installation process to a moving line.

At the same time, it has redesigned fixtures and moved equipment to make room for a third final assembly line that will be dedicated to production of the MAX.

So even as the early MAXs are built, Boeing will simultaneously raise 737 production from today’s rate of 42 jets per month to 47 per month next year, to 52 per month in 2018, and to 57 per month in 2019.

By then, most of the 737s coming out of Renton should be MAXs.

If Boeing is to maintain the 737 as a reliable cash generator, it must smoothly implement the transition to the MAX at these record high production levels.

On Thursday, Boeing delivered the 8,888th 737 to Xiamen Airlines of China — where the number 8 is considered lucky because it sounds similar to the Chinese word that means “prosperity.”

Soaring past any target a Boeing sales executive might have dreamed of in 1967, the MAX is set to to take future 737 deliveries well past the 12,000 mark.

Dominic Gates: 206-464-2963 or dgates@seattletimes.com

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