* Boeing grappling with future of 737
* Company debates re-engining and size
CHICAGO, April 12 (Reuters) - Boeing Co (BA.N) may be leaning toward building a new version of its best-selling 737 narrowbody jet, but industry experts said on Tuesday the company seems to be conflicted on the matter and appears increasingly less likely to make a decision in the next few months.
Boeing is deciding whether to redesign the 737 or simply put a more fuel-efficient engine in the existing design as its top rival Airbus EAD.PA intends to do with its competing A320.
A re-engined plane would offer fuel savings of about 10 percent and could be brought to market around 2016. An all-new version could offer double the fuel savings and be brought to market around 2019.
The world's second-largest commercial plane-maker appears to be "split internally" about the direction of the 737 program, said aerospace analyst Scott Hamilton from Leeham Co LLC in a blog posting. here
Hamilton said the split appears to be over the potential size of the new aircraft and whether it should feature two aisles instead of just one.
Boeing has said repeatedly it is leaning toward making an all-new 737. Mike Bair, Boeing's head of single-aisle development programs, told Reuters in March that Boeing hopes to share its direction by midyear, but he stopped short of promising a firm decision.
Boeing had previously said it would offer clarity on the 737 by the end of 2010, but delayed that decision.
"We are actively working with our customers and industry partners to identify the best solution for the small airplane market," said Boeing spokeswoman Lauren Penning.
"Boeing has been clear that we expect to provide more clarity about our product strategy direction by midyear," she said.
Airbus rolled the dice last year on a re-engined version of its competing A320. The company has pulled in impressive orders for the revamped model known as the A320neo.
Boeing and Airbus are racing for control of a single-aisle market worth an estimated $1.7 trillion over the next 20 years.
Alex Hamilton, managing director of EarlyBirdCapital, said he does not expect Boeing to announce plans for a new plane this summer.
"I believe they have several other issues on their plate and are very hesitant, I would assume, to mess with their bread and butter," said Alex Hamilton, managing director of EarlyBirdCapital. "In addition, I think the recent Southwest incident points to the wear and tear the 737 takes and how difficult a re-engine would be."
The 737 made headlines earlier this month after a Southwest Airlines 737 made an emergency landing with a gaping hole in the fuselage. U.S. regulators last week ordered airlines to inspect older model 737s for cracks. (Reporting by Kyle Peterson; Editing by Phil Berlowitz)