Transport

General Electric unconvinced about demand for Boeing’s new 797

GE unsure if demand for the potential mid-range aircraft will be enough to justify developing a new engine for the jet

A Boeing 787 putting on a display during the first day of the Farnborough Airshow in Britain. Photograph: Reuters/Peter Nicholls

Mon Jul 16 2018 - 20:37

General Electric said it remains unconvinced that demand for Boeing's potential mid-range aircraft, nicknamed the 797, will be enough to justify developing a new engine for the jet.

The US turbine maker needs to do more work on the proposals, especially since Boeing has yet to decide whether to recruit an exclusive engine provider or involve two competing suppliers, GE Aviation chief David Joyce said on Monday at the Farnborough Airshow in Britain.

“We’re still wrestling with what the size of the market is,” Mr Joyce said in a media briefing. “People feel great when you launch, but shareholders don’t feel great until you’re successful.”

Mr Joyce's caution underscores the uncertainty around Boeing's propulsion strategy as the planemaker crafts plans for the so-called new mid-market aircraft, or NMA, which it envisions as succeeding its 757 and 767 models and halting Airbus SE's success in edging into the niche with the popular A321neo.

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Boeing is mulling a two-jet family with 220 to 270 seats designed for 5,000-mile routes, available by 2025.

The decisions to launch the NMA and select engine suppliers probably won't be made until next year, Boeing chief executive Dennis Muilenburg said in an interview at the aerosapce expo in the UK.

He said the Chicago-based planemaker was evaluating all options for the turbines and having productive discussions.

Engine contract

GE is bidding for the engine contract through CFM International, its joint venture with France's Safran. United Technologies Corp's Pratt and Whitney division and Rolls-Royce Holdings have also prepared proposals for the aircraft, which is the only all-new jetliner in the pipeline among the four largest planemakers.

One potential customer for the plane, Avolon Holdings, is convinced Boeing will opt for two engine suppliers despite the risk that the market may not be large enough for both to see much return on the investment.

“If I was a betting man, I’d think Boeing will go with a dual source,” Dómhnal Slattery, chief executive of Avolon, a Dublin-based aircraft leasing firm, said in an interview. “They want to give maximum optionality to their airline clients. They want to create maximum tension on pricing. And they want to mitigate technology risk.”

Given concerns over teething issues in current-generation engines, many airlines would prefer to have a choice among new models developed for the Boeing plane.

Mr Slattery sees demand for about 3,000 to 4,000 jets in the segment targeted by Boeing. – Bloomberg

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