Bloomberg News

Boeing Picks 737 Upgrades While Eschewing Pentagon Frills

November 16, 2012

Boeing Co. (BA:US)’s defense unit will shun the commercial division’s planned 737 Max aircraft and stick with the current version of the narrow-body plane for its P-8A submarine hunters in order to avoid production disruptions.

“There’s not a plan to offer a Max P-8A,” Egan Greenstein, director of business development for the plane, said in an interview yesterday near Seattle. “But we’re not blind to the fact that there will be opportunities that come out of it and we want to be able to offer those to our customers.”

The P-8A is based on the existing 737 NG and built along the same production lines, which churn out hundreds of the narrow-body jets a year. The upgraded 737 Max, which is due to enter service in 2017, will feature new engines and other improvements that will help airlines cut fuel costs.

The company has reached the “firm concept” stage for the Max with the “firm configuration” to follow next year, it said yesterday. The planemaker also said it will use larger cockpit displays, similar to those fitted in 787s, from Rockwell Collins Inc. (COL:US) in the aircraft along with a new Honeywell International Inc. (HON:US) air system.

While some minor changes to the P-8 are possible, using Max developments, the sub-hunter generally will be delivered as the Navy ordered it in 2004, said Chuck Dabundo, the P-8 program chief. For instance, while the Pentagon is getting 787-style screens in the KC-46 aerial refueling tanker it ordered last year, the P-8 will stick with older systems.

“We have a set of displays that the Navy is comfortable with, and at this point there’s no plan to change the cockpit,” Dabundo said.

Boeing unveiled the Max last year after Airbus SAS announced similar changes to its competing narrow-body plane. The Toulouse-based planemaker has won 1,515 orders for its A320neo, compared with the 969 Boeing has secured for the Max.

Shared Lines

The P-8 is the first military derivative of a Boeing commercial plane to be built on the same production lines. The aircraft was designed to be as similar to a commercial 737 as possible. That saves time and money from previous models that were built and then torn apart to be militarized.

“When we sold the P-8 to the Navy, the winning element was commonality and cost,” said Carl Lang, the P-8 program manager on the Boeing Commercial Airplanes side.

Cost has become even more important as the Pentagon prepares to pare $487 billion from its budget over the next decade. The reductions could more than double if automatic budget cuts, known as sequestration, come into effect next year.

Future Production

Boeing has orders for 117 P-8s from the U.S. Navy and sees an international market for as many as 100, so it expects to be building the plane until early next decade, Dabundo said. The company also has more than 2,000 orders for the 737 NG in hand. It’s building a record 35 of the narrow-body planes a month, and is lifting the rate to 42 by 2014.

To ensure that the Max doesn’t disrupt this increase, the new plane will initially be built on a third line at the 737 plant near Seattle. Early production will be slowed by the need to install extra instruments on the first four test planes.

Once the Max gets up to speed, the other two lines will transition to that model, said Beverly Wyse, the 737 program manager. The third line could then be used to boost production even higher, and the company already is asking suppliers to get ready for that possibility, she said.

“We’re pretty sure it’s coming,” Wyse said of the possible additional increase in output. Then-Boeing Commercial Airplanes President Jim Albaugh said in May that the company planned to decide by the end of this year or early 2013 whether to lift the 737 rate beyond 42 a month.

To contact the reporter on this story: Susanna Ray in Seattle at sray7@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net


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