Boeing made its plans to re-engine the 737NG official today when it announced board approval to proceed with development of a CFM Leap-1B-powered version of the world’s best selling commercial airplane. So far, the company claims order commitments for 496 airplanes from five airlines and “a strong business case.”

“The re-engined 737 will allow Boeing to continue to deliver the most fuel-efficient, most capable airplane with the lowest operating costs in the single-aisle market,” said Boeing Commercial Airplanes president and CEO Jim Albaugh. “This, coupled with industry-leading reliability and maintainability, is what customers have told us they want. As a result, we are seeing overwhelming demand for this new and improved version of the 737. We are working with our customers to finalize these and other agreements in the weeks and months ahead.”

Boeing claims the new 737 family will produce a 7-percent operating cost advantage over its direct competition–the Airbus A320neo, which has already drawn firm orders and “commitments” for 1,200 airplanes since its launch last December. The A320neo, scheduled for first deliveries in 2015, will come equipped with either CFM Leap-X variants or versions of the Pratt & Whitney PW1000G Geared Turbofan.

Meanwhile, Boeing expects to deliver the first re-engined 737NG in 2017 to launch customer American Airlines, which earlier this month committed to an order for 100 of the Leap-1B-powered narrowbodies.

“Customers tell us they want to improve profitability and fuel efficiency while reducing their environmental footprint,” Albaugh said. “This solution meets all three of those needs.”

When compared with a fleet of 100 of today’s most fuel-efficient airplanes, the new Boeing model will emit 277,000 fewer tons of CO2 and save nearly 175 million pounds of fuel per year, which translates into $85 million in cost savings, said Boeing. The company claims the airplane will burn 16 percent less fuel than the current A320 family airplanes and 4 percent less than the A320neo.

Boeing did not elaborate on whether it would make the engine option available on all of its 737 variants, although earlier this year executives seemed to rule out re-engining the 737-600. The company forecasts a 20-year demand in the 737’s market segment for more than 23,000 airplanes valued at nearly $2 trillion.