Boeing NYSE:BA, a major U.S. commercial aircraft manufacturer, expects it may need until around the end of the 2030s to bring its next-generation single-aisle jet to market as the company focuses on repairing its finances and increasing production of the existing 737. Speaking at the Farnborough Air Show, Chief Executive Officer Kelly Ortberg said Boeing is not yet financially prepared to launch the costly new aircraft program, while current market conditions also do not appear ready to support it. Ortberg noted that customers are asking Boeing to concentrate on its existing aircraft rather than move quickly toward a replacement.
Boeing expects to spend another couple of years ramping up 737 production, which could help the company generate stronger positive cash flow and reduce debt before committing to a new aircraft. Ortberg said Boeing wants to be prepared when customer demand and market conditions are ready, adding that the new jet could be launched around the end of this decade. That timetable suggests Boeing may be taking a more conservative approach to replacing the 737, an important decision because the aircraft generates the bulk of the company's cash.
The timeline may also shape Boeing's competitive position against Airbus (EADSY), a European commercial aircraft manufacturer and its main rival in the global civil aviation market. Airbus has outlined a somewhat faster schedule that suggests it could introduce a new version of the A320 earlier in the 2030s, while both the A320 and 737 families represent the largest portion of the companies' order backlogs. Moving too early could leave key technologies insufficiently developed and weaken demand for existing aircraft, while waiting too long could allow a rival to gain ground, repeating some of the competitive pressure Boeing faced after Airbus launched the successful A320neo before Boeing responded with the 737 Max.