April 21, 2016 / 9:57 PM / a year ago

UPDATE 2-Boeing mulls new 737 jet variant, airlines interested

(Recasts to confirm that Boeing is considering new design; adds detail)

By Alwyn Scott and Jeffrey Dastin

April 21 (Reuters) - Boeing Co is studying whether to revise one version of its best-selling 737 aircraft in a bid to fend off competition, according to two people familiar with the matter.

The U.S. planemaker’s concept of a slightly larger version of its 737 MAX 7 jet with more seats and range drew airline interest on Thursday.

The plans are preliminary, without many specifics, the sources said. But Boeing has a product study underway to determine if such a jet would make sense, they added.

The plane could perk up relatively slow sales for the 737 MAX 7 and help Boeing’s market share battle with Airbus Group SE , which has outsold it with its competing A320 jet.

Boeing’s tweaked 737 also would help fight back competition from Bombardier Inc’s fledgling CSeries aircraft, which appears poised to win a large order from Delta Air Lines Inc.

Chicago-based Boeing declined to comment on the plan, which was first reported by The Wall Street Journal.

Boeing needs to win support for the proposed plane from Southwest Airlines, which has ordered the smallest model 737s, as well as United Continental Holdings Inc, the Journal reported.

Southwest, which only flies 737s, said on Thursday it would consider the plane. Asked if it would convert some orders to a new 737 variant, Chief Operating Officer Mike Van de Ven said no decisions have been made.

“Absolutely we would want to go and consider different options out there,” he told reporters in a conference call.

United did not respond to requests for comment.

American Airlines said: “We always look at new offerings from airplane makers, but we don’t have anything more to say about these reports right now.”

Boeing has officially called the model under consideration the 737 MAX 7X. It would seat around 150 passengers rather than 126, according to the Journal.

To make such an idea work, Boeing would have to juggle costs and operating efficiency for airlines. Technically, the new model would be a “shrink,” or shorter-fuselage version of the 737 MAX 8.

Analysts say shortened aircraft tend to be difficult to sell because they inherit part of the extra structural weight of the larger plane and are often considered inefficient.

Using the best-selling 737-8 as the starting point for a new type of 737 could pose such challenges, but may also be cheaper to make because of economies of scale in busy 737-8 production.

Two industry sources said Boeing may have pitched this idea to Delta without so far winning a favorable response. (Reporting by Alwyn Scott and Jeffrey Dastin in New York and Tim Hepher in Paris; editing by Tom Brown and Alan Crosby)

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