Southwest Airlines and Boeing have agreed on terms for a much-anticipated order for 100 737 Max 7s to replace the airline’s 737-700s, the companies confirmed Monday. A multi-year evaluation by Southwest pitted the smallest Max variant against the Airbus A220-300, raising the possibility that the airline might deviate from its all-Boeing fleet for the first time ever. The deal calls for delivery of the first 30 Max 7s to Southwest next year.
Under the agreement, the low-cost carrier also converted firm orders for 70 Max 8s to the same number of Max 7s and added options for another 155 Max 7s or 8s for the years 2022 through 2029. The order book additions and revisions result in a new firm order total of 349 Max jets (200 Max 7s and 149 Max 8s) and options on another 270 of the airplanes scheduled for delivery from 2021 through 2031. The company's previous order book consisted of firm orders for 249 Maxes (30 Max 7s and 219 Max 8s) and options on another 115 Max 7s or 8s for delivery from 2021 through 2026. Southwest still expects delivery of 28 Max 8s this year (19 from Boeing and nine from third-party lessors) and plans to retire seventeen 737-700s, ending 2021 with 69 Max 8s out of a total fleet of 729 Boeing narrowbodies.
The airline expects more than half of the 737 Maxes in its firm order book to replace a “significant” number of its 462 Boeing 737-700s over the next 10 to 15 years to support its fleet renewal efforts.
"We remain diligent in managing costs and capital spending, in particular in this environment,” said Southwest Airlines CFO Tammy Romo. “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 to be approximately $5.1 billion.”