May 2004 
Volume 03, Issue 1 
Commercial Airplanes

A rapid climb

Next-Generation 737 reaches 1,500 deliveries in record time


Leasing market upholds 737’s value

Although the 737’s value is easily measured in the air and on a company’s bottom line, it also can be measured by the leasing market. Within the last two years the number of A320s parked in the desert ballooned from eight to 91 aircraft. During that same period, its lease rates have fallen more than 30 percent.

That’s not the case for Next-Generation 737s. Shortly after the events of Sept. 11, 2001, and the subsequent downturn in the commercial airline market, Boeing cut production to match market demand. As a result, the number of parked Next-Generation 737s has remained low. According to recent industry reports, only eight Next-Generation 737s are parked.

“Boeing has reached a balance in terms of supply and demand by managing its production rate, and we’ve seen a firming up of 737 lease rates,” said Robert Genise, president and CEO of Boullioun Aviation Services. “Because Airbus chose not to reduce its production rate and because bankruptcies of key Airbus users have created a sizable surplus of A320s, there has been a significant negative impact on A320 lease rates and values.”

Nest-Generation 737
The Boeing Next-Generation 737 airplane has a typical cruise speed of Mach 0.785, or about 530 mph (853 kilometers per hour)—and a rate of sales and deliveries that’s even faster.

Boeing delivers its 1,500th Next-Generation 737 this month. This technologically advanced airplane reached this industry milestone in record time—six short years. Only three other airplane families have sold more than 1,500 airplanes: the 727, the classic 737-300/-400/-500 family and the Airbus A320 family. It took the classic 737 10 years, the A320 13 years, and the 727 16 years to reach this delivery milestone.

Since entering commercial service in 1998, the Next-Generation 737 has been the company’s best- and fastest-selling model. The success of the 737 family, which includes the 737-600, -700, -800 and -900, is no surprise to Product Development Manager Ed Kane, who was on the original design team.

“We knew from the beginning we were designing a family of airplanes that would fly higher, faster and farther than earlier 737s and the Airbus A320 family,” he said.

Kane emphasized that Next-Generation 737s feature an all-new wing design, a new flight deck, and new engines, tires, wheels and brakes, contrary to Airbus claims that the newest 737s are little more than warmed-over versions of the original.

“Essentially, the Next-Generation 737 is an all-new airplane,” he said. “The only thing left from the original design is an extremely efficient fuselage that has stood the test of time.”

About 98 percent of the parts on the newer family are common, which significantly simplifies and lowers maintenance costs for airlines. International Air Transportation Association statistics back that claim. Its latest report takes a four-year average, adjusts for flight times, airplane age and contract costs, and calculates maintenance costs for Next-Generation 737 operators compared to A320 operators are 33 percent lower.

In addition to lower maintenance costs, the design also produces lower operating costs and superior performance. For instance, a Blended Winglet–equipped 737-700 can fly 320 nautical miles farther than the A319 while carrying the same number of passengers. A winglet-equipped 737-800 can carry 12 more passengers, fly 260 nautical miles farther, 1,100 feet higher and climb to 35,000 feet 3.2 minutes faster than the A320.

The secret to the 737’s success: less weight. On average, the Next-Generation 737 models are about 7,200 pounds lighter than the Airbus series, which means 737s save on the costs of fuel and weight-based navigation and landing fees.

It is this type of performance that drives the jet’s popularity, said Carolyn Corvi, 737/757 vice president and general manager. “Airlines look for an airplane to reliably take passengers where they want to go at a price that affords them profitable margins,” Corvi said. “The 737 can do both superbly, and our customers have acknowledged that with their orders.”

To date more than 2,280 Next-Generation 737s have been ordered by 78 carriers worldwide, including large, traditional network operators.

The 737’s economic and aerodynamic performance also has made it an important part of the business strategy for profitable low-cost carriers such as Southwest Airlines, Ryanair, WestJet, Virgin Blue and AirTran Airways. AirTran Airways, which is expanding its service into new, longer-range markets, ordered 100 737s last year and begins taking delivery of its 737s this summer.

“We chose the 737 because it is a phenomenal airplane,” said Joe Leonard, AirTran Airways’ chairman and chief executive officer. “We’re confident that the 737’s economical operation and reliability will reduce our costs and allow us to offer our low fares and high-quality service to even more passengers.”

To ensure the value of the 737 is maintained and enhanced, Boeing’s strategy is to continue incorporating new technologies and design improvements. Vertical Situation Display, a flight deck system that shows an airplane’s current and predicted flight path, and a new comfortable and aesthetically pleasing lavatory are among changes introduced within the last 12 months.

“The key to maintaining the 737’s success is to keep developing capabilities that help our customers meet the challenges of a competitive market.” Corvi said. “That means 1,500 airplanes is just the beginning.”

In good company

Here’s a list of the companies that have ordered the Next-Generation 737.

Aeromexico (Mexico)
Air Algerie (Algeria)
Air Berlin (Germany)
Air China (China)
Air China Southwest Airlines (China)
Air Europa (Spain)
Air Pacific (Fiji)
AirTran (United States)
Alaska Airlines (United States)
All Nippon Airways (Japan)
American Airlines (United States)
Ansett Worldwide Aviation (Australia)
ARAMCO Associated Company (United States)
ATA Airlines, Inc. (United States)
Austrian (Austria)
BAVARIA International (Germany)
Boeing Business Jet (United States)
Boullioun Aviation Services (United States)
Braathens (Norway)
Britannia Airways (United Kingdom)
C.I.T. Leasing Corporation (United States)
China Airlines (Taiwan)
China Eastern Airlines (China)
China Eastern Airlines Wuhan (China)
China Eastern Yunnan Airlines (China)
China Southern Airlines (China)
Continental Airlines (United States)
COPA Airlines (Panama)
Delta Air Lines (United States)
Eastwind Airlines (United States)
easyJet (United Kingdom)
El Al Israel Airlines (Israel)
Ethiopian Airlines (Ethiopia)
Garuda Indonesia (Indonesia)
GATX Financial Corporation (United States)
GATX Jet Partners Ltd. (United States)
GE Capital Corporation (United States)
Germania (Germany)
Hainan Airlines (China)
Hapag-Lloyd Flug (Germany)
ILFC (United States)
ITOCHU AeroTech Corporation (Japan)
Jet Airways (India)
Kenya Airways (Kenya)
KLM - Royal Dutch Airlines (Netherlands)
Korean Air (South Korea)
Lauda Air (Austria)
Lineas Aereas Azteca (Mexico)
LOT Polish Airlines (Poland)
Luxair (Luxembourg)
Maersk Air (Denmark)
Midway Airlines (United States)
Oman Air (Oman)
Pegasus Airlines (Turkey)
Pembroke Group (Ireland)
QANTAS (Australia)
Republic of China Air Force (Taiwan)
Royal Air Maroc (Morocco)
Ryanair (Ireland)
SAS (Sweden)
Shandong Airlines (China)
Shanghai Airlines (China)
Shenzhen Airlines (China)
South African Airways (South Africa)
Southwest Airlines (United States)
Sumitomo Corporation (Japan)
Sunrock Aircraft Corporation (Ireland)
TAROM - Romanian Air Transport (Romania)
Tombo Aviation (United States)
Transavia Airlines (Netherlands)
TunisAir (Tunisia)
Turkish Airlines (Turkey)
Ukraine International Airlines (Ukraine)
United States Navy (United States)
Virgin Blue Airlines (Australia)
WestJet (Canada)
Xiamen Airlines (China)
Unidentified customers


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