Boeing is trying to push its advantage over Airbus, its ailing rival, with an all-new design for the biggest sector in the world’s aircraft industry.

The Seattle jet maker has started negotiations with global airlines over the future design of the Boeing 737 as it seeks to dominate the $1,000 billion (£515 billion) market for the workhorse of the skies in future decades.

Jim McNerney, Boeing’s chairman and chief executive, confirmed last week that talks are taking place with airline customers on what they want from a revamped 737.

The Times understands that two early prototypes have been drawn up: a wider, twin-aisle version and a shorter, single-aisle jet. These have been dubbed Fat Boy and Little Boy.

Mr McNerney has also confirmed that the new 737, which will appear in the middle of the next decade, is likely to have a carbon fibre fuselage to make it more fuel-efficient and more environmentally friendly.

The 737 is the world’s best-selling airliner with 6,831 sold since its mid1960s launch. It is ubiquitous on short routes and a favourite of budget airlines.

The 737 is on its ninth variation, but, at heart, is more than 40 years old. It is also under pressure from Airbus’s newer A320, and Boeing has decided that the 737 needs an overhaul.

However, given the enduring popularity of the 737, Boeing needs to offer a jet that is a substantial advance in technology to win the airlines’ imagination.

Mr McNerney said: “We do not have a concept yet, but are going around the airlines asking what capability they want.”

Several options are understood to be under consideration. One is a twin-aisle 737, which would allow Boeing to increase seats without stretching the aircraft too far.

A 220-seat 737 could allow airlines to carry more people and Boeing to fill a gap between the 190-seat 737 and its new 787, which has about 250 seats.

There remains a big market for smaller city-hopper flights and Boeing is unlikely to leave this to Airbus or Bombardier and Embraer, which have traditionally built sub100 seat aircraft. A second, shorter 737 with up to 150 seats could therefore be launched to fill this gap.

Boeing expects the single-aisle market to grow by 11,000 aircraft to 21,470 by 2025.

With Airbus busy sorting out problems with its A380 and designing the A350, Boeing could take a lead at the small end.

Doug McVitie, of Arran Aero-space, said of the 737: “Airlines love this plane and Boeing has to keep that interest.”

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax