The business of building commercial airlines is a big one, and with airlines' profits growing, the aerospace manufacturing industry could be set for strong performance over the next several years. But to sell the most, you have to build the best. As rivals Boeing (NYSE: BA ) and Airbus Group (NASDAQOTH: EADSY ) continue to battle for aircraft supremacy, two proposed models of aircraft are getting some attention.
Airbus A330 NEO
This Airbus wide-body aircraft has been one of the manufacturer's most successful, claiming 1,313 firm orders and a current backlog of over 200 aircraft. So why change it? Even as the current A330 has enough orders for another two years of production, some airlines are looking for an updated model.
In an effort to compete with Boeing's latest 737 models, Airbus has updated the engines on the aircraft in the A320 family to be more fuel efficient. As airlines are constantly looking to cut fuel consumption, some airlines are asking Airbus to incorporate its fuel-saving-engine technology into the wide-body A330.
An article from Aviation Week noted a perspective from an executive at a major A330 operator. The executive argues for the creation of an A330 NEO, citing a possible 7%-8% improvement in fuel burn and cost competitiveness compared to the Boeing 787-9.
Adding an A330 NEO could also give Airbus an edge in winning an upcoming wide-body order from Delta Air Lines (NYSE: DAL ) . Delta's fleet strategy has been an interesting one, but this wide-body order could total around 50 aircraft, and both Boeing and Airbus have a shot at winning it. According to Aviation Week, the Airbus A330 NEO is called out as an option if Airbus does indeed make the model. The specific mention of the rumored aircraft shows that Delta has a clear interest, implying that the A330 NEO could be near the top of the candidates for the wide-body order.
Boeing 757 replacement
When the Boeing 757 line was shut down in 2005, Boeing had delivered over 1,000 of the model, and the plane remains a part of major airline fleets. More recently, there has been talk from some Boeing executives about a new jet to fill the gap left by the Boeing 757.
Boeing has been busy developing new technologies to improve passenger comfort and reduce airline costs. With the success of the Boeing 757 during its time and the plethora of new technology being seen on the 737 MAX, 777-X, and 787 models, a new version of the 757 could find a good base of customers.
Rather than create an all-new jet, Boeing could save a lot of time and expense by incorporating its latest technology into the 757 body. The original 757 body could still be used; after all, it's newer than the original 737 body which Boeing continues to build new versions from. This would probably result in a Boeing 757 MAX.
By developing a 757 MAX, Boeing would have its latest technology available in the narrow-body segment (737 MAX), large narrow-body segment (757 MAX), wide-body segment (787), and large wide-body segment (777-X) forming a closely knit product line of top technology.
Developing a new plane, even if its from a current model, easily takes a few years from concept to launch. Investors in airlines and aircraft manufacturers need to take a long-term view to fully realize the potential of these developing planes. As of yet, both the A330 NEO and the 757 replacements remain only proposed aircraft as Boeing and Airbus look to gauge interest among airlines. Based upon airline responses and engineering feasibility, these two manufacturers will determine whether or not to produce these aircraft.
As Airbus and Boeing continue to fight for orders in a lucrative commercial airline market, look for any announcements about an Airbus A330 NEO or Boeing 757 replacement, as both manufacturers will no doubt be eager to promote their latest offerings.
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