The first Model 40 was redesigned as the Model 40A in 1927 using an air-cooled engine. This engine was about 200 pounds lighter than the water-cooled engines used by competitors for the airmail contract, so the Model 40A won and became the first Boeing-built airplane to carry paying passengers as well as mail. The Model 40 series (A, B, and C) flew under the banner of Boeing Air Transport, a new company subsidiary. Models 40X and Y were custom-built for oil companies.