This doesn’t even need to be said, but I have to start this post somehow: It has been a terrible couple of years for Boeing Commercial Airplanes. The company tried to fight the Bombardier C-Series but ended up strengthening it, now as the A220, under Airbus. Its reactive strategy to rejigger the 737 into the MAX to try to compete with the Airbus A320neo family has resulted in, well, a whole lot of pain. And now, its deal with Embraer — which was also reactive — has been blown up from the inside, leaving an angry and bitter former partner down in Brazil. Demand for airplanes has dropped to zero in light of the COVID-19 pandemic, and there is no recovery in sight. Despite all this, Boeing has an incredible opportunity to re-make itself. It will probably blow it.
I’m not writing this as someone who covers the manufacturing sector. For that, you’re better off subscribing to The Air Current. No, I’m looking at this from the perspective of the airlines. What do they want… or what will they want when the time comes again? Boeing’s current portfolio is severely lacking.
Think of this in comparison to the Airbus line:
What does Boeing really have here? The cupboards are terribly bare. The Embraer E2 is no longer part of the plan after Boeing called off its deal. The lower end of the 737 MAX range has received almost no interest, so a new project is required if Boeing wants to compete at all in the world under 160 seats.
The MAX is obviously not flying at all, and it hasn’t been for over a year. Who knows when that will end. But when it does, it will still be an inferior aircraft to the A320neo family, most strikingly at the top end where the A321neo outperforms the 737 MAX 9/10.
Above that, the so-called middle of the market, or NMA, airplane is likely dead. That was an imperfect project that tried to shoehorn an airplane into the gap that Boeing created by focusing on evolving the 737 instead of building a new airplane.
At the top end, Boeing has recently begun flight testing the 777X, a bigger and modernized version of the 777. But who wants that capacity right now? It never sold all that well outside of a large orders in the Middle East (sound familiar, A380 fans?), and the current situation ensures no interest for years to come.
What Boeing really has is the 787, the shining star and the last real gamble that the company took in the commercial airplane space. The 777-300ER has done well, but there are fewer than twenty aircraft left to be delivered. Again, orders are likely to be hard to come by.
With the product offering in shambles, what can Boeing do? Boeing built its success on bold gambles and engineering prowess. The most famous example, of course, was the 747 which became a world-beater thanks to Pan Am CEO Juan Trippe’s partnership and Joe Sutter’s team’s engineering feats. That company no longer exists, as has been well-documented.
What Boeing must do is listen to what customers really want. As of now, the answer is pretty much nothing. That, however, is a temporary state of affairs that will eventually change. The lack of short-term needs means that Boeing could bet the company and work toward something bold for the future.
Airlines will probably want the same thing they wanted before… a stellar 175-225 seat narrowbody with excellent economics. That was what Boeing tried to do with the 737 MAX, but in comparison to the Airbus offering, it failed. Then it started crashing and that obviously made things even worse. Boeing has now been reduced to trying to sell airplanes by bending over backwards to make them attractive. That’s why IAG bought 737 MAX airplanes while the airplane was grounded. It’s also why the rumors are likely true that Boeing is considering taking back a bunch of 717s from Delta in order to place the MAX with the airline. Considering Delta has nothing on order with Boeing, this would be a big win. But at what cost?
The right thing to do now is what was the right thing to do a decade ago. It’s time to say goodbye to the 737 and devote efforts toward a new airplane that is built for the segment. Boeing needs an airplane that makes the A321neo look like a bad decision.
It has hundreds of 737 MAX aircraft already built, so once it starts delivering them again, it will have plenty of work for employees to finish and get them off the property. But while we’re in this lull, Boeing could take a risk and say, “the MAX is dead.” Pour money and efforts into a new rock star that will be ready at just the right time.
Combine that with the 787, and you have two horses that can keep racing for years. Forget about the lower and upper ends. The lower end is big, but Boeing is so far behind it should focus elsewhere. And while Boeing is well-positioned for the upper end — things larger than the 787-10 — it’s just not going to be a huge market. Rally around the new narrowbody and the 787, and win.
It’s easy to say this, but Boeing’s balance sheet is a mess. That’s where the feds come in. This kind of strategy plays right into President Trump’s wheelhouse. Go hat in hand and say, “look, we’ve lost our way, but we’re back. We’re America, damnit, and we are going to build the best airplane for the best airlines. We’ve walked away from those Brazilians and we want to provide good jobs to Americans for years to come.” Then stick your hand out and beg for money.
By the time airlines are ordering airplanes again, the new airplane will be ready for sale. And by the time airlines actually want to take delivery of airplanes again, this will be ready to go. You don’t get a break in demand like this normally. You can either look at this is a horrible challenge or as a real opportunity. The Boeing of the 21st century would look at this with the former view. But a Boeing of the past would be willing to take big risks, bet the company, and try to win in the long run.
Is there any of that left in the company’s DNA? I’m sure it’s there hidden in a back corner, but whether it can percolate up to the level of management needed to make these bold decisions is incredibly unlikely. Still, this is a great opportunity. If anyone at Boeing can avoid squandering it, the airlines, your employees, and yes, America, will thank you.
