The need to be part of American Airlines’ historic narrowbody airplane order, coupled with the pressure to respond immediately to the market challenge posed by the Airbus A320NEO (new engine option) program, clearly was the deciding factor in Boeing’s offer of the new engine 737.

But they were not the only factors. Boeing blinked on its preference to introduce the New Small Airplane (NSA) as the successor to the 737NG family because it did not think the industry’s vast supplier network could meet the challenge of tackling another entirely new airplane over the next decade.

The Seattle airframer had been leaning toward introducing the NSA in 2019 or 2020, rather than taking the interim step of re-engining the 737NG.

“The technology is there,” Boeing Commercial Airplanes President and CEO Jim Albaugh said Wednesday at a joint news conference in Fort Worth with American Airlines Chairman and CEO Gerard Arpey and Airbus CEO Tom Enders. “But there is the issue of the production system, how quickly you can ramp up and how efficiently you can go to 40, 50, 60 airplanes a month. Quite frankly, we did not have those answers.”

Production Rates

Boeing is committed to producing 42 737s per month in the first half of 2014 as part of a broader expanse of a 40% buildup in aircraft production across all of its product lines by the end of 2013.

Airbus is moving to a 42-per-month production rate for the A320 in 2012 and is considering a bump-up of another two airplanes later, but has not made that decision, Enders said.

As for whether technologies exist for the step change needed for a successor to the A320, Enders stayed true to what Airbus has been saying for years. “We’re working on a new aircraft, but [technologies] are not maturing fast enough” to do it yet, he says.

So their response to American Airlines’ interest in changing out its entire fleet of single-aisle transports has not settled a basic split between Airbus and Boeing about the maturity of current aircraft technology. But it underscored their joint concerns about the industry’s supply chain.

Boeing officials say that a 42-aircraft rate at Airbus is not the same as 42 at Boeing because Airbus takes the month of August off for employee holiday time. Boeing says 42 at Airbus translates as 40 per month at Boeing.

Regardless, a combined 80 or more aircraft per month—960 or more per year—in single-aisle production is unprecedented. And that is coming from the two main producers alone. It does not factor Bombardier’s CSeries, Irkut’s MS-21 and Comac’s C919 challenges to the Airbus-Boeing duopoly.

All are to be producing aircraft in the same time frame as the new Airbus and Boeing single-aisles appear and make demands on the same system suppliers the U.S. and European airframers use.

Boeing has had two product development teams studying the 737, one for the NSA as a successor, the other for re-engining the 737NG. The NSA effort continues, although its likely service entry date is now pushed back to 2025 or beyond.

The re-engining effort has gone to the front of the pack. CFM International will be the sole engine supplier for the new engine 737 with its Leap-X technology, which already is being applied to the A320NEO and the C919. Pratt & Whitney’s PW1100G geared turbofan technology, which won a place on the CSeries and the A320NEO, was bypassed for the new version of the 737.

Airbus’ skepticism about the maturity of manufacturing large composite fuselage structures has already been expressed in the way it has designed the Airbus A350. It opted for composite panels attached to a traditional alloy airframe, rather than the large single-piece composite fuselage assemblies that Boeing pioneered for the 787’s fuselage.

Supply Chain Factors

Albaugh repeated the word “composites” several times during the American Airlines news conference as he referred to the technology base that Boeing found so attractive for the NSA. He did not reference the aluminum alloys that Alcoa has been trumpeting in recent months as it fights to win back a place on future airframes. Boeing’s launch of the composite 787 in 2004 changed the traditional role that aluminum alloys have played in aviation.

But the 787 also introduced a complex global assembly structure that Boeing and its suppliers have struggled with. As Albaugh spoke in Fort Worth, Boeing’s 787 factory in Everett, Wash., is taking a one-month breather in receiving new fuselage assemblies because shortages have hit the supply chain.

It is the fifth production hold in the 787 program, which is running more than three years late. The issue is complex, but some of it relates to the ability of major suppliers to keep up with Boeing’s production demands and some to parts shortages coming from sub-tier suppliers.

Boeing has said that it will not outsource as much work on its next major program as it did on the 787 because of the production woes it faced on the new jet.

Boeing produces the aluminum alloy 737s at its Renton factory south of Seattle, using fuselages built nose-to-tail by Spirit AeroSystems in Wichita. Spirit is committed to the 42 aircraft-per-month schedule Boeing is pursuing. As for the rest of the 737 airframe, all of it is produced by Boeing workers.

Boeing VP and 737 General Manager Beverly Wyse says Renton has factory space to support 60 aircraft per month. Still to come is where Boeing plans to assemble the new engine 737s.

Such questions cannot be answered until Boeing’s board of directors formally launches the new engine 737 program. The board is expected to take it up on the agenda of its August meeting. Boeing customarily does not reveal exactly when board meetings take place for security reasons.