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This October 4, 2008 photo shows an American Airlines aircraft taxiing to the gate at Dulles International Airport in Dulles, Virginia. American Airlines on July 20, 2011 announced a massive multi-billion-dollar order for 200 Boeing 737 and 260 Airbus A320 passenger jets. (KAREN BLEIER/AFP/Getty Images)
This October 4, 2008 photo shows an American Airlines aircraft taxiing to the gate at Dulles International Airport in Dulles, Virginia. American Airlines on July 20, 2011 announced a massive multi-billion-dollar order for 200 Boeing 737 and 260 Airbus A320 passenger jets. (KAREN BLEIER/AFP/Getty Images)

Boeing turns up heat in Airbus, Bombardier rivalry Add to ...

Boeing Co. is turning up the heat in the high-stakes rivalry with Airbus SAS and Bombardier Inc. over the lucrative single-aisle airplane market.

The U.S. aerospace giant now says it is moving in the direction of offering a variant of its 737 commercial aircraft rather than waiting until it can design and develop a completely new airplane at a later date.

In doing so, it is matching Airbus's strategy to re-engine its popular A320 family of airplanes, a move that puts more immediate pressure on Montreal-based Bombardier's all-new C Series jet.

If Boeing had decided to go with a completely revamped airplane, Bombardier would have had more time to market and establish its unproven C Series plane.

Boeing said Wednesday that American Airlines has committed to order a variant of its 737 featuring more fuel-efficient engines, pending final airplane configuration and launch approval of the program by its board of directors.

The commitment is for 100 planes, with options on 60 more.

The agreement is in addition to a firm order by American Airlines for 200 Boeing narrowbody planes, with options for 100 more.

American Airlines - a unit of AMR Corp. - also said it is ordering 260 Airbus A320 aircraft, including 130 units of Airbus' re-engined model.

The fact that Bombardier's C Series was excluded from American Airlines' massive order - said to be the biggest in aviation history -- is also a blow to the manufacturer's efforts to win more high-profile sales.

"We suspect [Bombardier]was pursuing American as a potential C Series customer given the airline's substantial fleet of aged MD-80s, with which the [C Series 300]competes. The more broad implication is the intensification of the competitive landscape for the C Series," UBS Securities Canada analyst Tasneem Azim said in a research note.

Boeing spokesman Tim Bader downplayed the potential threat to Bombardier.

"I don't know if I consider this a direct head-to-head competition, in terms of the decision we make for how many seats and all that. It remains to be seen."

Bombardier has it's targeting 50-per-cent market share of the 100-to-149-seat segment of the global commercial jetliner sector.

Bombardier spokesman John Arnone said the company is not overly concerned that Boeing had decided to go ahead with a re-engined 737.

"Our business plan for the C Series always assumed a competitive response," he said.

The C Series has a strong competitive advantage over both the re-engined Airbus and Boeing planes because it is the only all-new aircraft being offered by the three rivals, he said.

"The C Series remains the only 100 per cent all-new aircraft, including not only a game-changing engine but a more efficient airframe and ability to lead in terms of reduced fuel burn and lower operating costs. It's a value proposition that is unmatched and that is reflected in recent order momentum," he added.

National Bank Financial analyst Cameron Doerksen said in a note that a re-engined 737 will be "a more formidable competitor to Bombardier's C Series, at least relative to the current generation of 737."

But he added that the re-engined 737 faces the same challenges as the re-engined Airbus A320 - called the A320neo.

The Boeing 737 variant will be a much heavier aircraft, thus not as cost-efficient to operate and no doubt have the same avionics and other systems that were developed for the 737 in the 1990s, he said.

"Thus, the C Series will still be the only all-new narrow-body on the market until either Airbus or Boeing develops something new sometime post-2020. The C Series will also still be the clear leader for operating economics in the sub-150 seat category."

The Boeing decision to go with a 737 variant should also help airlines that have been sitting on the fence waiting to see what the full range of options available to them are finally make fleet decisions, he said.

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