Report: Boeing had no alternative on 737 engine upgrade

Boeing Co., the world's second- biggest commercial-aircraft manufacturer, had “no alternative” to offering a more fuel-efficient version of its 737 narrow-body following the success of Airbus's A320neo plane, Ryanair Holdings Plc said.

Chicago-based Boeing said July 20 that it would sell a version of its latest 737 with a new engine to AMR Corp.'s American Airlines, ending months of speculation on whether it would upgrade the plane or opt for a more expensive full redesign.

“Boeing's potential replacement, which probably would have been our preference really, was dead after the Paris Air Show,” Ryanair Chief Financial Officer Howard Millar said in an interview today. “Nobody was going to buy it and everybody was buying the neo, it was too far away. Airbus did a stunning job with orders for the neo.”

Market leader Airbus introduced the neo, which stands for “new engine option,” in December and announced 667 contracts or commitments for the plane in Paris last month. Airbus says the model offers a 15 percent efficiency gain over existing single-aisle planes and is the fastest-selling jet ever.

Ryanair, Europe's biggest discount carrier, is the second- biggest customer for Chicago-based Boeing's 737 after Southwest Airlines Co. The Irish carrier in 2009 pulled out of a deal to buy 200 more 737s after failing to agree on terms with Boeing.

Ryanair last month signed a memorandum of understanding with Commercial Aircraft Corp. of China to help develop the company's C919 model and may consider placing an order for as many as 200 aircraft. Ryanair would also consider being the international launch customer for the planes, Millar said.

“You can't ignore the Chinese,” Millar said. “They are a force, we should engage with them.”