Boeing Might Need to Consider a 757 Replacement to Stand up Against Airbus A321neo

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Mar 30, 2015

American aero major Boeing’s (BA, Financial) 757 model has attracted huge attention in recent times as airlines across the globe are pushing the plane maker to build a 757 replacement. The popular aircraft went out-of-production a decade ago as Boeing didn’t see enough demand to sustain its production line. Back then Boeing couldn’t have imagined that years later it would be pressed by carriers to build a replacement, thanks to the 757’s uniqueness – narrow-body long-range aircraft thanks to its immensely powerful engines. Now airlines and lease companies such as United Continental (UAL, Financial) and Air Lease Corp. (AL, Financial) are again very keen on having a plane that could fly the 757 routes. Here’s a lowdown on what’s going on.

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Picture taken from Boeing website

Why Boeing should think of a 757 replacement

Taking note of the opportunity –Â i.e., the rising demand for a narrow-body long-range jet, European aircraft manufacturer Airbus (EADSY, Financial) is trying to capture the market with A321neo, its long-range variant of A320neo family. This would help the company widen its narrow body lead further. This is why Boeing needs a 757 replacement. Without such an offering it might fall back.

The 757 has been an extremely popular model, filling the gap between the largest narrow body and the smallest wide body planes. The aircraft is a perfect fit for trans-Atlantic routes. As Boeing hasn’t come up with concrete plans discussing whether it would launch an upgraded version of the 757 or introduce an alternate aircraft, Airbus has marketed its A321neo saying that it could be a 757 substitute. As a result of all this, customers are flocking towards the European jet maker. Air Lease Corp. had been pushing Boeing to come up with a 757 replacement – a jet that would be bigger than the 757, but smaller than the 787 Dreamliner. Finally when Air Lease CEO Steve Udvar-Hazy saw no progress, he placed orders for A321neo.

What’s Boeing doing about it?
Air Lease CEO Steven Udvar-Hazy believes that demand in the 200 to 250 seat category would increase over the next eight to 12 years. Probably Boeing also understands this, and that’s why it has been in talks with several potential buyers regarding their demand for such aircraft. The Chicago based company’s marketing VP Randy Tinseth said “What customers want is a plane that’s bigger than a 757 with 25 percent more range.” The plane maker is accordingly considering how to plug in the gap between narrow bodies and wide bodies. The 757 was uniquely positioned to carry 243 passengers –Â more passengers than narrow body planes carry but less than wide body aircraft.

Currently the aero major is occupied with the upgrades of the current models – 737 and 777. However, if Airbus continues to hurt Boeing’s market share in the single-aisle plane category, Boeing might have to consider developing a 757 replacement sooner than expected. Last year Boeing said that the company would introduce a new narrow body, succeeding the 737 Max, sometime around 2030. But, up to now the company hasn’t commented on the option of making a small twin-aisle aircraft. It remains to be seen how the company responds to this demand, particularly as Airbus is trying to barge into the 757’s territory.