A320NEO vs. B737NG+

Signs are getting clearer that Airbus will proceed with the A320NEO to go ahead and announce that in the coming weeks. Meanwhile flightblogger comes with the news that Boeing has a 3rd way to react (with the 1st being also doing a reengining, the 2nd going with an all new design).

Boeing claims that that the A320NEO would only have a 3-4% operating cost improvement over the existing version. Hard to believe, if one believes the likes of CFM and P&W: 15% fuel burn reduction minus 1-2% through integration of the larger and heavier engines, plus the 3-4% improvement via the sharklets would result in 16-18% reduction in fuel burn. Considering that fuel costs are at 40% of the total COC this would lead to a COC reduction of 6.4-7.2%. If you then believe that maintenance costs are 20% below today’s engines and consider lower environmental costs, Boeing and their B737NG+ will significantly fall behind the A32XNEO, especially the A321NEO will burn the B737-900ER, which even today is a slow seller.
Then consider lower environmental costs, especially for European operators:
a) The inclusion of aviation in the ETS (Emissions Trading System) will add about 12% to the fuel costs.
b) Lower noise fees could save up to 4% COC of a 500nm flight. For example, at Paris CDG Airport an A319 today pays $177 (at $1.30/€) more than the CSeries CS300 will pay for noise. The difference of the A320NEO vs. the B737NG+ would be in the same range.
c) NOx fees at many European airports will also be lower, but this contributes just a few € to the equation.
All in all, Boeing could only sell their B737NG+ for a steep discount, profit margins will fall. At the same time they have to invest (more or less, but probably more) heavily in their most profitable program, the B777, as the A350XWB threatens to eat these margins, with the B787 and the B747-8 being far away from being profitable.

Not a good time to be a Boeing shareholder…