By Chris Stetkiewicz and Bradley Perrett SEATTLE/LONDON, May 10 (Reuters) - Boeing Co. (BA) is considering building a new, more efficient airliner to replace its slow-selling 757 and 767 models in what would be its first all-new program in a decade, people familiar with the plans said. The company has not yet decided to launch the new aircraft, which could revamp the middle of its commercial jet line, but several industry sources said it was as likely to be built as the sonic cruiser, a faster jet Boeing has proposed over the past year. Boeing rejected that claim, however, stressing that the sonic cruiser, which would soar higher than current airliners at just under the speed of sound with engines behind massive, rear-mounted, double-delta wings, took top priority. The new mid-sized jet would open a new front in the battle with European rival Airbus SAS (EAD)(EAD). While the sonic cruiser might make Airbuses seem slow, the new plane could also render them relatively inefficient. In private talks airlines have shown interest in the 20-percent boost in speed the sonic cruiser could offer, but some also expressed demand for a modernized conventional jet seating 200 to 250 people with lower fuel burn, sources said. "We fully expect (Boeing) to build a new airplane. What that airplane is, we are not sure yet," said one industry source familiar with the company's thinking. "Boeing will build a 'green' (more efficient) plane before the sonic cruiser." SHARPENING THEIR PENCILS Boeing's engineers are working intensively on this project, which would be Boeing's first all-new plane since the 350-seat 777 energized its wide-body sales in the 1990s, sources said. "A lot of Boeing's commercial aircraft range has fallen behind the state of the art. It increasingly believes it needs to do something about that," one source said. "They see a 777-style aircraft as a good solution to the problem." Another alternative was an extensive overhaul of the 250-seat 767. Recent modest improvements to the 767 have failed to hold off the popular Airbus A330-200. Boeing spokeswoman Lori Gunter said the manufacturer's product design team always looked at a wide range of potential new aircraft, but denied any had overtaken the sonic cruiser. "We always study everything, but the sonic cruiser is our primary product under development," Gunter said. NEW ENGINES POSSIBLE A new aircraft might also require new turbofans from one or more of the world's three main aero-engine manufacturers: General Electric Co. (GE), United Technologies Corp. (UTX) unit Pratt & Whitney, and Rolls-Royce Plc (RR). All of those companies have recently developed engines that might be adapted but none has a completely modern power plant of just the right size for a 767. Any conventional 757 and 767 replacement would also be sized close to the sonic cruiser, which could leave the company with undesirable competition within its own product line. But several sources said that Boeing had to do something to fend off a strong challenge from Airbus, which has steadily gained market share with more modern jets offering a number of common features that reduce operating costs. The fierce competition, including allegations of cutthroat pricing on both sides, has held down profits at both manufacturers. BACKLOGS THINNING Even before the Sept. 11 hijackings slashed air travel and airline demand for new planes, backlogs for several Boeing models were declining to worrisome levels. Though the manufacturer closely guards its monthly production rates, its 757 backlog of 40 orders would equate to about 20 months of production, even if it trims the rate to two a month from an average of 3.5 per month in 2001. Boeing has booked only eight 757 sales in the last 15 months and with airline jet demand seen sluggish for perhaps several more years, that model looks ripe for an upgrade, sources said. But Boeing says productivity improvements have made its factories more efficient and capable of making money even at very slow rates. The 106-seat 717, unprofitable in 2001 at four units a month, is now rolling out at just one per month. The 767 looks slightly better positioned, with perhaps 30 months left at two units per month. That program could also get a big boost from a proposed U.S. Air Force order for 100 tankers based on the wide-body. "Sales of 767s have been soft, but it is a good airplane and well liked by passengers and airlines," said Peter Jacobs, an analyst at Wells Fargo. "There could be an opportunity (for a new plane) with the 757." Jacobs noted the largest 737 models, the -800 and -900, can seat up to 177 passengers, approaching the 757's seating capacity of 200 to 243. The 767 also encroaches on the 757 market, seating 200 to 300. Some observers said Boeing would keep quiet about any new mid-sized plane for as long as possible, lest airlines delay any plans to order 757s and 767s, which would be less efficient and likely see their resale values fall. ©2002 Reuters Limited.