Boeing (NYSE:BA) and Airbus are locked in a duopoly in the global market for commercial airplanes. The past decade was dominated by Airbus as it garnered more new orders for airplanes compared to Boeing in each year except for 2006 and 2007. In 2011, Airbus bagged orders for 1,419 commercial airplanes compared to 805 by Boeing.  However, in 2012 Boeing has led Airbus by a significant margin in the race for new commercial airplane orders. Boeing has received net orders for 1,056 airplanes in 2012 through November 27.  In comparison, Airbus has managed orders for 403 airplanes in 2012 through October 31. 
What has enabled Boeing to topple Airbus from the top position in 2012? The Boeing 737MAX.
The 737MAX is Boeing’s latest model in the single-aisle, short-to-medium range airplane category. This plane which is currently under development with a scheduled introduction in service in 2017 promises jet fuel savings of up to 13% compared to its previous model. This has prompted many airlines to place large orders for the 737MAX as jet fuel savings greatly improve their bottom lines.
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737MAX drives the order book for Boeing
Out of the 1,056 net airplane orders for Boeing in 2012 through November, 728 are for the 737MAX.  Thus, clearly the 737MAX has driven the order book for Boeing in 2012. This airplane model is powered by the LEAP 1B engine which is manufactured by CFM International, a joint venture between GE Aviation and Snecma of France; and this advanced engine is a key factor behind the model’s higher fuel efficiency.
The development status of the 737MAX
At present, Boeing has finalized 737MAX’s firm concept which defines in broad terms the key features of the airplane. In terms of design changes on the previous 737 model, the 737MAX’s tail cone and wings have been redesigned to supplement the fuel savings offered by the new engine. In addition, the bump on the airplane’s nose has been eliminated. Major suppliers have also been finalized – Honeywell for electronic bleed air systems, Rockwell Collins for flight deck displays, among others.  The company plans to start work on the model’s detailed design by mid-2013 and make the first delivery in 2017.
The 737MAX brings Boeing at par with Airbus in the short-to-medium range airplane category
The 737MAX was launched in response to Airbus’ A320neo (new engine option) which had significantly increased Airbus’ lead over Boeing in new airplane orders in 2011. The A320neo was launched in 2010 and the model received a record 1,276 orders in 2011.  However, post the launch of 737MAX in late 2011 orders for A320neo declined significantly. In 2012 through October 31, Airbus received orders for only 248 airplanes of the A320neo family.  Like the 737MAX, the A320neo also promises fuel savings of up to 15% on its previous model, and is currently under development, but is expected to enter service in 2015 – a couple of years prior to 737MAX.
Boeing’s 737MAX received its first order in December 2011 – an order for 150 airplanes placed by Southwest Airlines (NYSE:LUV), and through November 2012 the 737MAX received total orders for 878 airplanes.  Thus, 737MAX still lags behind the cumulative order tally for Airbus’ A320neo. But, if its performance in 2012 continues then it will plug this gap soon. However, the 737MAX will find it difficult to break in to the fleet of airlines which have traditionally operated Airbus airplanes. As operating airplanes from multiple manufacturers increases maintenance and training costs for airlines.
Nonetheless the launch of 737MAX has positioned Boeing at par with Airbus in the single aisle, short-to-medium range airplane category – the highest selling airplane category, and significantly bolstered the chances of Boeing of keeping its top position in new airplane orders. However, Boeing will have to maintain production schedules and avoid delays in delivery timelines to keep the pressure up on Airbus.Notes:
- Competition Between Airbus and Boeing, www.wikipedia.com [↩]
- Boeing Orders & Deliveries, www.boeing.com [↩]
- Airbus Orders & Deliveries, www.airbus.com [↩]
- Cumulative orders for 737MAX, www.boeing.com [↩] [↩]
- Boeing 737MAX achieves firm concept, November 15 2012, www.boeing.com [↩]
- Airbus A320neo Orders and Deliveries, www.wikipedia.com [↩] [↩]