Southwest Airlines plans to grow its fleet by about 85 aircraft in 2022, but its order-book flexibility and plethora of older aircraft it could park gives it flexibility to increase or decrease the figure based on market conditions, company executives said.
The Dallas-based airline has firm-order delivery slots for 72 Boeing 737 MAX-family aircraft—all -7s—in 2022. It also has options for 42 -7s or -8s. Right now, it plans to take all 114 and retire 28 737-700s, EVP and incoming CEO Robert Jordan said during a recent investor day event. But neither of those figures are etched in stone.
“We have a tremendous agreement with Boeing, and you want to take advantage of that,” Jordan said. “We have a lot of flexibility. [We are] committed to 72 firms, and that could change. Our intent is to take the 114, but we’re not committed to the 114 at this point.”
The incoming aircraft are earmarked to replace 737-700s—many of which are around 20 years old. The carrier’s plan is to retire “30 to 35” aircraft per year as part of a fleet refreshment, Jordan said.
“That said, if needed, we can flex that even higher,” he added. “The fleet replacement provides us a variety of benefits, including significantly lower maintenance expense in the first 5-7 years, less out-of-service downtime for better reliability and 14% better fuel efficiency.”
Counting the 2022 orders and options, the carrier has lined up a maximum of 632 737 MAX deliveries through 2027. They include 264 -7s, 149 -8s, and 238 options. Right now, 2027 has the largest share of potential additions, with 180 orders and six options on the books.
Southwest sees 2022 as a period to re-set its operation and build both the staffing and the fleet depth to meet what is expected to be strong demand as the pandemic’s headwinds continue to ease. It is projecting a return to consistent profitability, starting with the 2021 fourth quarter.
“Based on what we’re seeing this year, there’s robust leisure demand. Hopefully, business demand returns,” CFO Tammy Romo said. “We’ll have the aircraft that we need for our growth aspirations for 2023.”
Southwest ended the 2021 third quarter with 737 aircraft in its fleet, including 461 737-700s, 207 737-800s, and 69 737-8s. As of mid-December, 27 of them—23 737-700s and four 737-800s—were either parked or in a low-utilization parked-reserve status, indicating one or two days of activity per week, Aviation Week Fleet Discovery showed.
The carrier has another 35 in storage, Aviation Week data show, but these include at least some that have been removed from the fleet permanently and are not counted in the carrier’s officials totals. Southwest pulled forward several announced retirements and planned to remove a total of 18 aircraft from its fleet during 2021. The changes would leave it with 728 aircraft in its operating fleet to start 2022, it said.
While demand will play a key role in determining Southwest’s fleet evolution, several other variables could factor in as well. One is labor. The carrier’s effort to add 5,000 employees in 2021 “is going well,” Romo said, though the carrier is expected to fall short. In 2022, the plan calls for adding about 8,000 more. “However, we are being cautious given the tight labor market, and it will take us a while to staff up,” Romo said.
Another issue is certification of the 737-7. Boeing has completed its flight tests and certification paperwork for the variant, Boeing SVP of commercial customer support and commercial derivative programs Mike Fleming said at the recent Dubai Air Show. But, he cautioned, the U.S. FAA will determine whether Boeing has met its requirements and when a final sign-off will come.
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