Key Points:
  • Boeing faces stiff competition from Airbus in the narrowbody market, holding about 40% of the market share as opposed to Airbus’ 60%. The new development comes as Boeing is still recovering from the economic downturn brought by the COVID-19 pandemic and the grounding of the 737 MAX following two crashes due to faulty software.

  • BofA Securities analyst Ron Epstein suggests that Boeing can enhance its position in the market with the development of a new plane that employs advanced technology, such as high-wing design and sustainable aviation fuel (SAF), to improve lift and reduce carbon footprint, respectively. The new jet could potentially generate over $100 billion in gross profit throughout its lifespan.

  • Epstein envisions a new aircraft slightly larger than the existing MAX and A321neo, targeting a market of about 6,500 units. The proposed jet would feature innovative elements such as truss braces and an unducted turbofan engine to enhance efficiency.

Boeing’s Road to Recovery: New Narrowbody Jet Could Generate Over $100 Billion in Gross Profit

Picture Credit: Leeham News

ARLINGTON —In a recent analysis by BofA Securities analyst Ron Epstein, Boeing finds itself at a disadvantage in the narrowbody market when pitted against industry competitor, Airbus, primarily due to the latter’s popular new generation A220 and A321 models. The current market dynamics reveal Airbus holding a significant 60% market share in the narrowbody sector, indicating a dominant position. Despite Boeing’s leadership in the widebody jet category, Epstein underscores the company's need to bolster its stance in the narrowbody sector to avoid falling prey to reduced pricing and profitability.

The tumultuous path that Boeing navigated through the Covid-19 pandemic, coupled with the grounding of the 737 MAX following two crashes linked to software malfunctions, has exacerbated its market position. A bleak financial trajectory has seen the company fail to register positive free cash flow from 2019 to 2021, with projections for 2022 and 2023 amounting to an estimated $6.5 billion, a stark contrast to the nearly $14 billion generated in 2019.

In spite of financial constraints, Epstein advises against sidelining the development of a new plane. Leveraging new technology could potentially usher in gross profits exceeding $100 billion over the aircraft’s operational tenure, far outstripping the anticipated $13 billion gross profit in 2024. The roadmap to such a groundbreaking invention involves a high-wing design enhancing lift and featuring truss braces, an innovative addition to commercial aircraft typified by struts connecting the fuselage to the mid-wing.

In addition to a revamped wing structure, Epstein envisions the integration of an unducted turbofan engine, optimizing efficiency while unveiling a visually striking engine with visible fan blades. The fuel blueprint banks on sustainable aviation fuel (SAF), formulated from renewable sources such as plant oils and waste fats, promising to decrease the carbon footprint, albeit without significantly augmenting efficiency.

The blueprint sketches a jet moderately exceeding the dimensions of the current MAX and A321 NEO, eyeing a market potential of approximately 6,500 units. Such a strategic move could be pivotal in regaining market ground, with reference to Boeing’s over 7,000 MAX orders compared to Airbus’s commanding lead with over 10,000 orders for its A220 and NEO series.