One of the world’s largest lessors believes that Boeing’s recent  launch of the 737 MAX 10 will significantly improve the manufacturer’s share of the narrowbody market, but probably at the cost of limiting sales of the smaller MAX 9.

In an assessment of the MAX range, Ireland-based Avolon said Boeing’s MAX product strategy decisions had been reactive, “resulting in lower market share and a plethora of variants which do not all reflect actual market demand.”

It said that, in launching the re-engined A320neo, Airbus had gained an advantage on the US manufacturer, presenting it with a technical and commercial dilemma.

The re-engined MAX had been Boeing’s only option to compete against the A320neo in a timely manner, the lessor said. A clean-sheet design would have entered the market several years after the A320neo and Boeing’s ability to match the A320neo production rate with that of a new program would have taken several years to achieve, at the cost of market and customer share.

But in the rush to get the 737 MAX to market, Boeing had neglected to consider and counter Airbus’ key strength, the high-capacity A321neo, Avolon said.

The lessor said the launch of the MAX 10 at the Paris Air Show in June had strengthened the overall family and had “already doubled Boeing’s market share in the large narrowbody segment.” The aircraft garnered a large crop of orders and commitments at Le Bourget.

However, “The 737 MAX 9 no longer serves as the lowest unit cost family member and is severely impacted by the launch of the MAX 10. With only slightly improved unit cost over the MAX 8 it is unclear what role remains for the aircraft, which is expected to have a very limited future.”

Of the other members of the MAX family, it described the MAX 7 as “a niche product when performance and range is required. The market shift away from smaller variants has been driven by several factors, including unit price and the focus of the LCCs on larger models. A change in pricing strategy could stimulate further demand.

“The 737 MAX 8 remains the heart of the MAX family and a key target for investors. The aircraft has maintained its cash operating cost (COC) advantage over the A320neo on a per seat and trip basis, although only by a small margin.

“The 737 MAX 10 will complete the MAX family and will be a much improved competitor compared to the MAX 9. It will be a capable seat cost machine for operators looking to grow beyond the 737- 800 and 737 MAX 8. However, it will some have airfield performance limitations. The A321neo will remain the high density seat cost leader in this market.”

Avolon added that, to date, 54% of Boeing 737 New Generation operators that had previously ordered new aircraft directly from Boeing did not have commitments for the 737 MAX. “With delivery slots unavailable, pent-up demand exists which supports the placement of lessors’ speculative orders.”

Alan Dron