I think thats a reasonable bet in the long term but I can't see Airbus making a A321 sized new model this decade. The A320 family is young compared with 737 and the smallest 787 is too large to compete directly. The A321XLR has received a tremendous number of orders since it was announced last year and once the pandemic subsides it will be sell placed to sweep the lower end of the middle of the market. There will be plenty of airlines that thought the A321XLR was a bit too small but will happy with it post pandemic. That may cause production capacity issues and a A220-500 would use different production lines. They could limit sales to existing A220 customers to avoid losing too many A320 sales. The A220-300 is the series base model so a further stretch for a A220-700 is possible although unlike the proposed 500 version, I don't think serious design work has been done.
Airbus have previously mooted a mid-to-late-20s programme launch for an A320 family replacement, aiming for a entry into service in the early 2030s. Realistically this is all going to be linked to the launch of ultra-high bypass turbofans.
I'd be skeptical about a A220-700; the A220-500 will already likely be as long as an A321 which provides a fair deterrent against stretching further (given gate compatibility, etc.), as the five-abreast seating inherently lengthens it for the same capacity.
There have been rumours that Boeing was working on a new plane to replace the 737, but when Airbus announced the A320neo they felt the need to react as a new plane available in 10-15 years would not stop existing Boeing customers switching to Airbus.
And combine that with airlines inherently having a balancing act between fuel efficiency and pilot training for any 737 replacement, which inherently means a shared type rating is valuable to airlines. But yes, I think it's been publicly said that a large part of the 737MAX programme being launched was to compete with the A320neo.
So am I, I'm of the view the 757 is the best looking and most versatile aircraft Boeing ever produced. In contrast, the larger variant of the 737 which was designed to replace it had poorer runway and climbing performance, as well as an inferior range. I dearly hope that if there is a 797, it's a brand new narrow body design which sees off the 737 and introduces a much needed 757 replacement.
Of the 1,050 757s built, around 650 are still in active service.
The 757 was a niche, though. Over a slightly shorter time period, Airbus has delivered over 6000 A320 family aircraft. That makes it vastly easier to justify the business case to spend the billions to develop the airframe
Airbus could hypothetically make a further A320 family stretch, the A322, and with the ever-increased MTOW of the A321 it looks ever more viable, and they've occasionally looked at doing so since the A321 launched.
With Boeing's current difficulties and the A320's family large order book, there's no pressing need to launch such an aircraft now: the A321XLR is taking up what slack there is in the market, and even if they launched an A322 soon it would be many years before the entry to service.
