LONDON – Southwest Airlines (WN) gives the nod to a long-time rumored 737 MAX order after committing today to up to 255 aircraft.
The order comes in the 50th anniversary year of the airline. It cements the long-standing relationship the airline has with Boeing. It also gives a boost to a much-needed 737 MAX 7 backlog, with WN and Westjet (WS) as the sole MAX 7 customers to date.
The agreement calls for the delivery of 100 new Boeing 737 MAX 7s, with the first 30 expected to arrive in 2022. This order emphasizes the fleet’s modernization with more powerful and, most importantly, environmentally friendly aircraft.
A Huge MAX Order
As part of the agreement, WN converted 70 MAX 8 firm orders to MAX 7 firm orders and added 155 MAX options for MAX 7 or MAX 8 aircraft from 2022 through 2029. These order book additions and revisions “result in a new total of 349 MAX firm orders (200 MAX 7 and 149 MAX 8) and 270 MAX options for MAX 7 or MAX 8 aircraft for years 2021 through 2031.”
The airline expects delivery of 28 Boeing 737 MAX 8 aircraft in total this year (19 from Boeing and 9 from third party lessors), as well as 17 Boeing 737-700 withdrawals, ending in 2021 with 69 Boeing 737 MAX 8 aircraft and a total of 729 aircraft.
With today’s order, WN is once again confident of the potential of the Boeing 737 MAX for its future plans. The airline was the launch customer of the 737 MAX 8 and is scheduled to be the launch customer of the 737 MAX 7. Southwest was also responsible for launching prior 737 generations, including the -300, -500, and -700 series.
Statement from Southwest Airlines CEO, COO
Gary Kelly, Southwest’s Chairman and Chief Executive Officer, said, ” Southwest Airlines has been operating the Boeing 737 series for nearly 50 years, and the aircraft has made significant contributions to our unparalleled success.”
“Today’s commitment to the 737 MAX solidifies our continued appreciation for the aircraft and confirms our plans to offer the Boeing 737 series of aircraft to our Employees and Customers for years to come. We are proud to continue our tradition of being the world’s largest operator of an all-Boeing fleet.”
“The MAX aircraft, with CFM International’s LEAP-1B engines, enable exceptional operational efficiencies such as a 14 percent lower rate of fuel burn that reduces carbon emissions, quieter engines which benefit the communities we serve, and excellent dispatch reliability to support our on-time operations,” said Mike Van de Ven, Southwest’s Chief Operating Officer.
“In addition to supporting our efforts to operate sustainably and efficiently, the 737 MAX offers Employees and Customers travel comforts such as a quieter cabin, larger overhead bin spaces, seating with adjustable headrests, and more galley space for onboard service.”
The airline expects more than half of the 737 MAXs in the next 10-15 month to replace 462 Boeing 737-700NGs from its fleet.
Statement from Southwest Airlines VP, CFO
Tammy Romo, Executive Vice President and Chief Financial Officer, said, “We remain diligent in managing costs and capital spending, in particular in this environment. Our refreshed order book with Boeing allows Southwest to preserve the low-cost advantages of a single fleet type, and the balance of firm orders and options—along with flexibility with 737-700 retirement plans—allows the opportunity to manage our fleet needs over the next decade.”
“We now estimate contractual aircraft capital spending for all years 2021 through 2026, which consists of 169 MAX firm orders with Boeing (135 MAX 7 and 34 MAX 8 aircraft), to be approximately US$5.1bn. Our estimated contractual aircraft capital spending remains immaterial in 2021, and is expected to be approximately US$700m in 2022.”
Romo added that the airline estimates 2021 capital expenditures to be no more than US$500m, driven primarily by technology, facilities, and operational investments.
Featured image: Southwest’s Boeing 737 MAX Photo: Brandon Farris/Airways