Two years ago, as part of an order for additional Airbus (NASDAQOTH:EADSY) aircraft, JetBlue Airways (NASDAQ:JBLU) secured an option to convert some of its A321neo orders to Airbus' new long-range A321LR model. The A321LR has up to 4,000 nautical miles of range -- sufficient for flights from New York and Boston to most of Western Europe.

JetBlue sees the A321LR as a potentially attractive addition to its fleet. Nevertheless, two years after starting to evaluate that model, it still hasn't pulled the trigger.

A JetBlue A320 preparing to land

JetBlue is considering converting some existing Airbus orders to the A321LR. Image source: JetBlue Airways.

However, Airbus has started to evaluate an even longer-range A321neo variant, provisionally known as the A321XLR. If Airbus goes ahead with this aircraft, it could be a game changer in terms of JetBlue's ability to expand into longer-haul international markets.

The A321LR has limitations

JetBlue can convert A321neo orders to A321LRs whenever it wants, but it needs to notify Airbus two years in advance of when it would want the first A321LR. JetBlue executives have stated that they would decide between taking regular A321neos and A321LRs based on the relative margin potential of transatlantic routes versus domestic A321neo flying.

Part of the company's hesitation relates to concerns about the A321LR's effective range. While Airbus has marketed the plane as a 757 replacement, JetBlue executives have noted that 757s often have to make fuel stops on westbound flights back to the U.S. in the winter. These fuel stops add costs and lead to delays that could alienate customers.

The A321XLR could address these concerns. As currently conceived, it would offer at least 4,500 nautical miles of range, thanks to an increased maximum take-off weight and an expanded center fuel tank. The extra range would likely allow the A321XLR to operate reliably on all of the most popular transatlantic routes from Boston and New York.

An A321LR test aircraft parked on the tarmac

Airbus may supplement the A321LR with an even longer-range variant. Image source: Airbus.

Airbus is also considering a modest stretch of the aircraft, adding room for two extra rows of economy seats. This would drive down unit costs.

The A321XLR might also have enough range to enable JetBlue flights to popular European destinations like Prague, Rome, Venice, and Vienna that wouldn't be reachable with an A321LR. This would expand JetBlue's addressable market.

It's not just about Europe

One of the most appealing aspects of the A321XLR for JetBlue is that its usefulness wouldn't be confined to European routes. It could also enable expansion in South America. Former JetBlue CEO Dave Barger stated back in 2012 that Latin America was underserved from the U.S. relative to Europe and Asia, and thus could be a more attractive growth market.

Today, JetBlue serves a handful of cities in northern South America, including Bogota and Lima. However, seven of the 10 largest metropolitan areas in South America are located in the southern part of the continent, in Argentina, Brazil, and Chile.

With the exception of Brasilia, these cities are 4,000 to 4,400 miles from Fort Lauderdale. That likely puts them outside of the A321LR's range, but within the A321XLR's projected range. By enabling nonstop flights from the continental U.S. to cities like Buenos Aires, Rio de Janeiro, Santiago, and Sao Paulo, the A321XLR could have significantly more appeal for JetBlue than the current A321LR.

This is still a paper airplane

The A321XLR would offer JetBlue the same advantages as the A321LR, including low fuel burn and commonality with the carrier's existing A320-family fleet. Meanwhile, its additional range would reduce the likelihood of fuel stops on westbound transatlantic flights and open up a slew of new potential destinations in Europe and South America.

Still, while the A321XLR concept could be a real game changer for JetBlue, there's no guarantee that Airbus will actually go ahead with this design. Some reports indicate that the A321XLR will only be built if Boeing forges ahead with its "new midsize aircraft" project. But the proposed specifications are still being finalized.

In short, the A321XLR could have a lot of potential for JetBlue. Furthermore, it may be available as soon as 2022: just two years after the earliest possible date that JetBlue could add A321LRs to its fleet. Nevertheless, investors shouldn't get too excited yet.

Adam Levine-Weinberg owns shares of JetBlue Airways and is long January 2019 $10 calls on JetBlue Airways. The Motley Fool recommends JetBlue Airways. The Motley Fool has a disclosure policy.