Southwest chooses B737 MAX 7 as -700 replacement

Following an intense scrutinisation process in which it also assessed the A220-300 from Airbus (AIB, Toulouse Blagnac), Southwest Airlines (WN, Dallas Love Field) says it has chosen the B737-7 from Boeing (BOE, Chicago O’Hare) to replace its B737-700 fleet. In a statement, the Texas-based LCC said the two sides had now reached agreement on 100 firm B737 MAX 7 orders with the first 30 scheduled to be delivered in 2022. As part of the agreement, Southwest also converted seventy MAX 8 firm orders to MAX 7 firm orders and added 155 MAX options for MAX 7 or MAX 8 aircraft for the years 2022 through 2029. With these order book additions and revisions, Southwest now has 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. Previously, the LCC’s order book consisted of 249 MAX firm orders (thirty MAX 7 and 219 MAX 8) and 115 MAX options for MAX 7 or MAX 8 aircraft for years 2021 through 2026. The carrier said it continues to expect the delivery of a total of twenty-eight MAX 8 this year (19 from Boeing and nine from third-party lessors), in tandem with seventeen 737-700 retirements. It, therefore, expects to end 2021 with sixty-nine MAX 8s and 729 total aircraft including its fleet of 207 B737-800s.Southwest said it expects more than half of the B737 MAX aircraft in its firm order book to replace “a significant number” of its 462 B737-700s over the next 10 to 15 years. “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 B737-700 retirement plans — allows the opportunity to manage our fleet needs over the next decade,” Tammy Romo, Executive Vice President and Chief Financial Officer said in a statement. “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 thirty-four MAX 8 aircraft), to be approximately USD5.1 billion. Our estimated contractual aircraft capital spending remains immaterial in 2021, and is expected to be approximately USD700 million in 20223. We continue to estimate 2021 capital expenditures to be no more than USD500 million, driven primarily by technology, facilities, and operational investments,” he said.