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

(Recasts to confirm that Boeing (NYSE:BA) is considering new design; adds
detail)
By Alwyn Scott and Jeffrey Dastin
April 21 (Reuters) - Boeing Co BA.N 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
AIR.PA , which has outsold it with its competing A320 jet.
Boeing's tweaked 737 also would help fight back competition
from Bombardier Inc's BBDb.TO fledgling CSeries aircraft,
which appears poised to win a large order from Delta Air Lines (NYSE:DAL)
Inc DAL.N .
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 LUV.N , which has ordered the smallest model
737s, as well as United Continental Holdings Inc UAL.N , 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.