DALLAS, March 29, 2021 /PRNewswire/ -- Southwest
Airlines Co. (NYSE: LUV) announced today the
completion of its previously disclosed discussions with The Boeing
Company (Boeing) regarding the restructuring of its delivery
schedule for MAX aircraft. The Company has completed the multi-year
evaluation of the successor aircraft to its Boeing 737-700 model,
with the selection of the Boeing 737 MAX 7 aircraft. Southwest
Airlines® and Boeing reached agreement on 100 firm
orders for MAX 7 aircraft, with the first 30 scheduled to be
delivered in 2022. This agreement underscores Southwest's
commitment to continued modernization of its fleet with more
fuel-efficient and climate-friendly aircraft. It also positions
Southwest to capitalize on growth opportunities, when they
arise.
As part of the agreement, the Company also converted 70 MAX 8
firm orders to MAX 7 firm orders and added 155 MAX options for MAX
7 or MAX 8 aircraft for years 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 Company's previous
order book consisted of 249 MAX firm orders (30 MAX 7 and 219 MAX
8) and 115 MAX options for MAX 7 or MAX 8 aircraft for years 2021
through 2026. The Company continues to expect delivery of 28 MAX 8
aircraft in total this year (19 from Boeing and 9 from third-party
lessors), as well as 17 737-700 retirements, ending 2021 with 69
MAX 8 aircraft and 729 total aircraft.
Today's announcement reinforces the Company's confidence in the
737 MAX as the future of the Southwest fleet. This cost-effective
order book with Boeing allows the Company to maintain the
operational efficiencies of an all-Boeing 737 fleet to support its
low-cost, point-to-point route network. The Company was the launch
Customer of the MAX 8 and is scheduled to be the launch Customer of
the MAX 7 after also launching prior 737 generations, including the
-300, -500, and -700 series.
"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," said
Gary Kelly, Southwest's Chairman and
Chief Executive Officer. "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 burn1 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 Company expects more than half of the 737 MAX aircraft in
its firm order book will replace a significant amount of its 462
737-700 aircraft over the next 10 to 15 years to support the
modernization of its fleet, a key component of its environmental
sustainability efforts. Southwest is proud of its fuel efficiency
improvement of nearly 50 percent since 20002, and the
billions of dollars in capital expenditures committed to the 737
MAX order book reinforces the airline's commitment to further
improve fuel efficiency and reduce carbon emissions.
"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," said
Tammy Romo, Executive Vice President
and Chief Financial Officer. "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 $5.1 billion. Our
estimated contractual aircraft capital spending remains immaterial
in 2021, and is expected to be approximately $700 million in 20223. We continue to
estimate 2021 capital expenditures to be no more than $500 million, driven primarily by technology,
facilities, and operational investments."
The Company's flight schedules are currently published and
available for sale through August 16,
2021. The Company remains cautious in this uncertain
environment where travel demand remains depressed due to the
negative financial effects of the COVID-19 pandemic; as such,
available seat mile (ASMs, or capacity) plans have not been refined
beyond May 2021. The Company will
continue to plan for multiple fleet and capacity scenarios;
however, the refreshed 737 MAX order book and predominantly owned
737-700 fleet is intended to provide a high degree of flexibility
for the Company to manage fleet retirements, growth opportunities,
and capital spending in a variety of economic environments.
Additional information regarding the Company's delivery schedule is
included in the accompanying table.
1
|
737 MAX 8 compared
with the 737-800. MAX 7 is expected to produce comparable fuel
efficiency improvement compared with the 737-700.
|
2
|
Measured as revenue
ton miles per gallon from 2000 through 2019. A revenue ton mile is
one ton of revenue traffic (passenger and cargo) transported one
mile. See 2019 Southwest Airlines One Report for more
information.
|
3
|
Net of progress
payments made on undelivered MAX aircraft and previously agreed
upon delivery credits provided by Boeing to the Company due to the
settlement of 2020 estimated damages relating to the Federal
Aviation Administration (FAA) grounding of the 737 MAX
aircraft.
|
NEW 737 DELIVERY SCHEDULE
|
The Boeing
Company
|
|
|
|
MAX 7
|
MAX 8
|
MAX 7 or 8
|
Additional
|
|
|
Firm
Orders
|
Firm
Orders
|
Options
|
MAX 8s
|
Total
|
2021
|
-
|
19
|
-
|
9
|
28
|
2022
|
30
|
-
|
42
|
-
|
72
|
2023
|
30
|
-
|
38
|
-
|
68
|
2024
|
30
|
-
|
40
|
-
|
70
|
2025
|
30
|
-
|
40
|
-
|
70
|
2026
|
15
|
15
|
40
|
-
|
70
|
2027
|
15
|
15
|
30
|
-
|
60
|
2028
|
15
|
15
|
30
|
-
|
60
|
2029
|
20
|
30
|
10
|
-
|
60
|
2030
|
15
|
45
|
-
|
-
|
60
|
2031
|
-
|
10
|
-
|
-
|
10
|
|
200
|
149
|
270
|
9
|
628
|
New 737 Delivery Schedule footnotes:
- The Company has flexibility to designate firm orders or options
as MAX 7 or MAX 8, upon written advance notification as stated in
the contract.
- The 9 additional MAX 8 aircraft shown above are leases to be
acquired from various third parties. The Company also received 7
leased MAX 8 aircraft in fourth quarter 2020, for a total of 16 MAX
8 operating leased aircraft from third parties in 2020 and 2021,
combined.
PREVIOUS 737 DELIVERY SCHEDULE
|
The Boeing
Company
|
|
|
|
MAX 7
|
MAX 8
|
MAX 8
|
Additional
|
|
|
Firm
Orders
|
Firm
Orders
|
Options
|
MAX 8s
|
Total
|
2021
|
7
|
100
|
-
|
9
|
116
|
2022
|
-
|
27
|
14
|
-
|
41
|
2023
|
12
|
22
|
23
|
-
|
57
|
2024
|
11
|
30
|
23
|
-
|
64
|
2025
|
-
|
40
|
36
|
-
|
76
|
2026
|
-
|
-
|
19
|
-
|
19
|
|
30
|
219
|
115
|
9
|
373
|
Previous 737 Delivery Schedule footnote:
- The 'Previous 737 Delivery Schedule' shown above is for
reference and comparative purposes only. It should no longer be
relied upon. See 'New 737 Delivery Schedule' for the Company's
current aircraft order book.
ABOUT SOUTHWEST AIRLINES CO.
In its 50th year of service, Dallas-based Southwest Airlines
Co. continues to differentiate itself from other air
carriers with exemplary Customer Service delivered by more than
56,000 Employees to a Customer base that topped 130 million
Passengers in 2019. Southwest has a robust network of
point-to-point service with a strong presence across top leisure
and business markets. In peak travel seasons during 2019, Southwest
operated more than 4,000 weekday departures among a network of 101
destinations in the United States
and 10 additional countries. In 2020, the carrier added service to
Hilo, Hawaii; Cozumel, Mexico; Miami; Palm Springs,
Calif.; Steamboat Springs; and Montrose (Telluride), Colo. Thus far in 2021,
Southwest has initiated service to Chicago (O'Hare) and Sarasota/Bradenton both on Feb.
14; as well as Savannah/Hilton
Head and Colorado Springs both on March 11; and will begin service to Houston (Bush) and Santa Barbara, Calif. both on April 12; Fresno,
Calif. on April
25; Destin/Ft. Walton Beach on May 6; Myrtle Beach,
S.C. on May 23; Bozeman, Mont. on May
27; and Jackson, Miss. on June 6. The Company has also
announced an intention to initiate new service to Eugene, Ore. and Bellingham, Wash., later this year.
The carrier issued its Southwest® Promise in May 2020 to highlight new and round-the-clock
efforts to support its Customers and Employees well-being and
comfort. Among the changes are enhanced cleaning efforts at
airports and onboard aircraft, along with a federal mandate
requiring every person to wear a mask at all times throughout each
flight. Additional details about the Southwest Promise are
available at Southwest.com/Promise.
Southwest coined Transfarency® to describe its
purposed philosophy of treating Customers honestly and fairly, and
low fares actually staying low. Southwest is the only major U.S.
airline to offer bags fly free® to everyone (first and second
checked pieces of luggage, size and weight limits apply, some
carriers offer free checked bags on select routes or in qualified
circumstances). Southwest does not charge change fees, though fare
differences might apply.
Southwest is one of the most honored airlines in the world,
known for a triple bottom line approach that contributes to the
carrier's performance and productivity, the importance of
its People and the communities they serve, and an overall
commitment to efficiency and the planet. Learn more about how the
carrier gives back to communities across the world by
visiting Southwest.com/citizenship.
Book Southwest Airlines' low fares online
at Southwest.com or by phone at 800-I-FLY-SWA.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
This news release contains forward-looking
statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. Specific forward-looking statements
include, without limitation, statements related to (i) the
Company's plans and expectations regarding its fleet, fleet
delivery schedule through 2031, and related fleet modernization
efforts; (ii) the Company's expectations with respect to fuel
efficiency and the anticipated environmental and operational
benefits of the Boeing 737 MAX; (iii) the Company's estimated
contractual aircraft spending for 2021 through 2026, as well as
other estimated capital expenditures for 2021; and (iv) the
benefits and opportunities expected to be received from the
Company's refreshed 737 MAX order book and predominantly owned
737-700 fleet. These statements involve risks, uncertainties,
assumptions, and other factors that are difficult to predict and
that could cause actual results to vary materially from those
expressed in or indicated by them. Factors include, among others,
(i) the Company's dependence on Boeing with respect to the
Company's fleet order book and delivery schedule, as well as the
Company's and Boeing's dependence on third-party providers, to
perform in accordance with expectations in connection with the
manufacture and delivery of aircraft; (ii) the extent of the
COVID-19 pandemic, including the duration, spread, severity, and
any recurrence of the COVID-19 pandemic, including through any new
variant strains of the underlying virus; the effectiveness and
availability of vaccines; the duration and scope of related
government orders and restrictions; the extent of the impact of the
COVID-19 pandemic on overall demand for air travel and the
Company's related business plans and decisions; and any negative
impact of the COVID-19 pandemic on the Company's access to capital;
(iii) the impact of fears or actual outbreaks of other diseases on
consumer behavior and the Company's overall business plan, business
decisions and strategies; (iv) the impact of economic conditions,
fuel prices, actions of competitors, consumer perception, and other
factors beyond the Company's control on consumer behavior and the
Company's overall business plan, business decisions, and
strategies; (v) the impact of governmental actions and governmental
regulations on the Company's plans, strategies, and operations;
(vi) the Company's ability to timely and effectively implement,
transition, and maintain the necessary information technology
systems and infrastructure to support its operations and
initiatives; and (vii) other factors, as described in the Company's
filings with the Securities and Exchange Commission, including the
detailed factors discussed under the heading "Risk Factors" in the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2020.
View original
content:http://www.prnewswire.com/news-releases/southwest-airlines-adds-100-firm-orders-for-the-boeing-737-max-7-301257190.html
SOURCE Southwest Airlines Co.