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Boeing executive sees strong demand for 737 MAX, confident on 777

Demand for fuel-efficient narrowbody jetliners like the Boeing 737 MAX remains “very strong” despite the recent oil price slump, the planemaker’s top salesman said on Wednesday.

Although lower oil prices might make some airlines hesitate about upgrading their fleets, the overall boost to the economy from cheaper energy is sustaining new jet demand, he said.

In an interview with Reuters, John Wojick, Boeing’s vice president for global sales & marketing, echoed a consensus among participants at a Dublin finance gathering that the slide in oil prices would not significantly undermine new jet demand.

“We don’t think the decrease in oil prices drives a significant change in demand for new fuel efficient equipment,” Wojick said.

Pricing for aircraft like the narrowbody 737 MAX, a revamped version of Boeing’s best-selling model with fuel-saving engines, remains “solid”, he added.

Delegates at this week’s Airline Economics conference said the drop in oil could reduce the premium Boeing and rival Airbus can get for the 737 MAX or competing A320neo, compared with current versions, as the benefits become harder to sell.

Wojick agreed prices for current models might go up as airlines hold them longer than planned, but added, “the demand for incremental airplanes actually goes up because more people want to travel and it becomes more affordable”.

Even with oil prices at $40 a barrel, it makes sense to upgrade to new technology, Wojick said. He said oil had been at $40 when Boeing launched its 787 Dreamliner, though industry sources say the business case assumed roughly twice that level.

Boeing’s top sales executive also said he was not worried by a lead taken by Europe’s Airbus in sales of the revamped narrowbody jets, seen as a cash cow for both groups.

Many analysts say Airbus is winning the battle for narrowbody sales while Boeing is ahead on long-haul aircraft.

Wojick reiterated he was confident Boeing would fill an order gap for the current version of its large twin-engined 777 pending the arrival of a new model in 2020. Boeing has filled about half of the gap with 278 Boeing 777-300ERs left to build.

“We are working on continuing to fill that backlog. We have done a good job for 2015 and 2016 and continue to work on 2017.”

The challenge of completing the order ‘bridge’ eased on Tuesday when United Airlines confirmed reports it was considering whether to exchange some existing orders for the 777-300ER.

Wojick said Boeing had no plans to add seats to the future 777X after Airbus suggested it would add 20 seats to its future A350-1000 to lower costs per seat. It will keep its 777-8X at 350 seats and 777-9X at 406, he said.


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