(Bloomberg)—Boeing Co. is coming to this year’s Paris Air show with some hard choices that will go far in determining who comes out on top in the jetliner duopoly it shares with Airbus SE.

Reeling from the grounding of its most important aircraft in the wake of two deadly crashes, Boeing needs to reconsider its timeline and strategy for new models. Piling on pressure is Airbus’s likely unveiling of a long-range variant of its A321 model, potentially siphoning off more business from its U.S. rival in the increasingly important market for midrange planes.

The cat-and-mouse game over jets to be rolled out during the next decade is one of the top issues for Boeing Chief Executive Officer Dennis Muilenburg as he meets customers and faces the public at the industry’s biggest gathering, which kicks off June 17 on an airfield north of Paris.

His choices: spend big on a so-called mid-market airplane, or NMA, to stanch customer defections to the A321. Or plow that $15 billion or so into the 737’s successor—a scenario that has gained considerable urgency now that the Max grounding is in its fourth month and some customers are considering dropping their orders outright.

If Boeing doesn’t strike just the right balance, “Airbus has a clear path to 60% market share for the next 10 to 15 years,” said Henri Courpron, chairman and founder of Plane View Partners and a former executive in the aircraft-leasing business. “Airbus is sitting pretty and waiting to see Boeing show its hand.”

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The dynamic is reminiscent of a showdown in 2011, when Airbus upset the balance of power by pulling in a massive order from American Airlines, a longtime Boeing customer, thanks to a new-engine option on its single-aisle planes. That shocked Boeing into responding with the 737 Max, the model that is now at the heart of the deep crisis buffeting the company.

The European planemaker last year gained control of the A220, the most technologically advanced aircraft in the segment, from struggling Bombardier Inc. Boeing recently countered by forming an commercial-aircraft joint venture with Embraer SA.

Boeing wouldn’t discuss its plans for the NMA or an eventual 737 replacement.

“I feel very confident in the Max family of aircraft,” Muilenburg said May 29, when asked about a future single-aisle plane. “So we have not changed our expectations on the longevity of that line. But we’ll continue to keep an eye on those more distance future product opportunities, as well.”

Airbus declined to comment on its plans for any product announcements at the show, the first time that new CEO Guillaume Faury will oversee the action.

XLR Potential

American, India’s IndiGo, JetBlue Airways and aviation entrepreneur David Neeleman have all expressed interest in the proposed A321XLR, the new model Airbus is studying to clip sales from Boeing’s proposed mid-range jet. The latest A321 would be available by 2023 or 2024, a year ahead of the NMA, with the range to cruise between, say, central Europe and the middle of the U.S.

Airbus already leads in the lucrative sales of the narrow-body planes that form the backbone of most fleets and are favored by budget carriers. Falling further behind would threaten Boeing’s ability to command price discounts from suppliers in an industry driven by volume. And its dominance of wide-body jet orders would be eroded if Airbus’s sales team took full advantage of their growing customer base, said aerospace consultant Richard Aboulafia.

He even sees a scenario in which the historic relationship between the two duopolists is reversed, “where air transport is identified with Airbus, and Boeing is seen as this second player,” said Aboulafia, a vice president at the Teal Group in Fairfax, Virginia.

‘Big Mistake’

None of Boeing’s options is easy. The planemaker has spent years searching for digital production advances that could bring its planned twin-aisle design closer to a single-aisle jet’s costs. While abandoning that effort for a 737 replacement might seem like the right thing to do given the Max backlash, moving too soon could be financially ruinous, turning a trickle of canceled Max orders into a flood.

“I think that would be a big mistake,” said Adam Pilarski, senior vice president with Avitas, and a former chief economist and director of strategic planning with Douglas Aircraft Co. “I’m not saying you don’t need it—the answer is you do. But do the NMA first, learn from it.”

The Boeing NMA would slot into the space left open by its aging 757 and 767 jetliners. Dubbed the 797 by analysts, the plane would also be the only all-new aircraft in an industry that has relied in recent years on upgrading existing air frames, like the A320 family or the 777X, a bigger, more powerful version of Boeing’s popular long-range jet.

Max Future

But could Boeing afford two all-new jets? Such decisions are on hold for now, as the company focuses on convincing regulators and the flying public that the Max is safe.

The mounting Max-related bills are staggering: from storing 500-plus planes to the 73 lawsuits, and counting, filed against Boeing so far for the Lion Air crash in October and a fatal Ethiopian Airlines accident in March.

Almost every aspect of the Max crisis is complicated by the jet’s significance to Boeing. Prior to the crashes, the 737 was on track to generate about one-third of Boeing’s 2019 operating profit, according to George Ferguson, analyst with Bloomberg Intelligence. The company’s 4,550 unfilled Max orders would keep its factory busy years into the future.

Boeing still stands by both the Max and its previous goal of rolling out the NMA family by 2025 to span the gap between single-and twin-aisle aircraft. The Chicago-based planemaker is thought to have about 1,000 engineers already working on the NMA, with another experienced corps at the ready through its deal with Embraer. Boeing has yet to finalize a decision on whether to build the NMA, and no announcement is expected until after the Max is flying again.

Aircraft ‘Leapfrog’

Potential buyers of the NMA, from Qatar Airways to Delta Air Lines Inc., remain interested in an all-new design specifically tailored to 5,000 nautical mile flying. Even Neeleman, a potential XLR launch customer, said last month the Boeing plane “would fit very well with what we’re doing.”

Given that the two aircraft manufacturers are bound together in a global duopoly, Boeing may be able to change the dynamics to its advantage. Should it decide to go with the NMA but design it in a way that it can also replace the Max, that may turn the tables and put pressure on Airbus to respond.

“These guys leapfrog each other,” Neeleman said. “They take what the other guy had and try to better it.”

—With assistance from Janan Hanna.

To contact the reporters on this story: Julie Johnsson in Chicago at [email protected];Benjamin Katz in London at [email protected]

To contact the editors responsible for this story: Brendan Case at [email protected], Benedikt Kammel

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