Which airlines could be interested in a re-engined passenger 767?

Hello All,

Unless Boeing receives an exemption from ICAO regulations, it won’t be able to sell the 767 freighter past 2027. This is because the CF6 engines of the 767-300F do not meet the new emissions standards.

While the American OEM might already have asked for an exemption, it is also studying re-engining the 767-300F with the General Electric GEnx-1B of the 747-8. Re-using an existing engine saves on development costs.

In this context, Boeing also studying whether resurrecting the passenger variant with the updated engines makes business sense. This blog post assesses which airlines could be interested in operating the re-engined aircraft.

The edgiest of edgy business cases

Leeham News is running an excellent series on the topic. Without disclosing the article content, the fuel efficiency gains with such an aircraft are minimal. The per-seat economics of such an aircraft aren’t competitive vs. a 787-8, let alone the larger A330-900 or 787-9.

This blog is not knowledgeable enough to know how much extra certification work is involved in certifying a passenger vs. freighter variant. Also, it is unclear what else Boeing would need to upgrade on the 767 to bring it to the latest certification standards (it entered service 40 years ago). If the costs are too high, developing a passenger variant might not make sense.

After accounting for development costs, would such an aircraft be much cheaper to produce than a 787-8? Such an aircraft would also compete with (cheaper?) second-hand 787-8s that will come off lease in future years.

We now focus on the (limited) potential market for the aircraft.

A narrow list of potential airlines

Given the small performance gains of a re-engined 767, it would only make sense to order it for airlines that meet the following criteria:

• Are existing 767 passenger operators to save on fleet transition costs;
• Do not yet operate the Dreamliner, except for United Airlines;
• Are airlines with the business model and financial strength to place orders with OEMs or source new aircraft from lessors;
• The 767 fits like a glove in the airline’s existing network.

This blog believes only the following airlines could be interested:

• Delta Air Lines, operating 66 767s, would almost certainly be the aircraft launch customer. It is the airline where the 767 fits best, at least when almost fully amortized. Note that some of the A330-900s will replace aging 767-300ERs, so the replacement potential is likely smaller.
• United Airlines, which operates 53 767s, has committed to the Dreamliner for its long-term replacement plans. The carrier’s network structure might have enough routes to justify a dedicated re-engined 767 fleet, but this blog is skeptical because of the fleet commonality loss. Those orders would be conversions from the existing 150 787-9s.
• Japan Airlines, operating 27 767-300ERs, has not placed enough orders to replace its entire 767 fleet. This blog is even more skeptical about a potential order for the Japanese carrier, which already operates the 787 and A350. A third family is likely too much from a fleet commonality standpoint.
• Three other small carriers could plausibly place an OEM order: Air Astana (3), Icelandair (3), and Air Niugini (2).

Conclusion

In this blog’s opinion, the market potential for a re-engined passenger 767 is between 50 and 150 aircraft. The commercial success would be comparable to the 747-8 passenger variant, which sold to three airlines (19 to Lufthansa, 10 to Korean Air, and 7 to Air China). Is this enough to recover the extra costs associated with development and certification? This blog is skeptical in the context of increased regulatory scrutiny.