Boeing 7J7 as direct replacement for the 727 in the late 1980s

When Boeing ended 727 production in the early 1980s, they didn't have a 150-seat airliner to sell. The range was split between the 737-300, typically seating around 125 pax, and the 757-200, typically seating around 200 pax. Boeing had pushed the 757 as a larger successor to the 727-200, which could seat 140 pax, but did not have an option for 737 operators looking to go up in size.

In 1984, after the 757 and 767 had entered service, Boeing signed an MOU with Japanese elements (a relatively common thread in Boeing strategic planning in that era; the 777 includes a substantial proportion of Japanese content) to develop and produce a new 150-seat airliner powered by the IAE V2500 (an engine with substantial Japanese content). Ultimately, the 7J7 program failed to move forward due to a multitude of factors centering around Boeing's desire to market the 757, the diverging market demands between American and European airlines at the time, and a desire to wait for until propfan technology was more mature.

The POD here is centered around the engines. The CFM56-2 that was being produced in large numbers to go on Boeing 367s, 707s, and Douglas DC-8s had a 172 cm fan. This fan diameter was also used on the CFM56 engines designed for the A320 family. Because the 737 was originally designed for low-bypass turbofans (JT8Ds, the same engines that the 727 used), it sat lower, so the CFM56-3 engines designed for the 737 Classic application had a 152 cm fan. Here, instead of introducing the 737-400 around 1990, Boeing builds a new short-haul airliner loosely based on the 757 and designed to use underslung, podded engines with 170+ cm fans. The new plane comes in two variants, a 40-ton, 150-pax short version comparable to an A320 or 737-800 and a 45-ton, 180-pax long version comparable to a 737-900 and slightly smaller than an A321.

With a new airplane following almost the same timeline through the 1990s to the present day as the Airbus A320 family, how does the reduced focus on the 737 impact Boeing's future? Competition with the A320neo would presumably be easier than the 737 MAX due to the increased ground clearance. The PW1000G on the A320neo has 2+ meter fans almost as large as the early CF6 engines on the 747, 767, and DC-10, while the MAX struggled to accommodate a 176 cm fan on the CFM LEAP. The version of the LEAP on the A320neo has a 198 cm fan and a higher bypass ratio. With the 757 and 767-200 clearly the oldest planes in the Boeing line without a replacement, would development focus in the 2010s go more towards the New Midsize Airplane incorporating 787 technologies?
 
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