Fleet Modernization - Southwest rejigs B737 orderbook amid MAX 7 delays

The President and CEO of Southwest Airlines (WN, Dallas Love Field) says the low-cost carrier expects to begin receiving B737-7 MAX in 2024, but if not, will continue taking B737-8 MAX instead, stressing the importance of maintaining an orderly and stable flow of entry-into-service aircraft.
"We told you back in April that we were reflowing our order book to allow for orderly and measured growth, and we're still finalizing the details of that with Boeing, but we remain confident that we will get the 70 deliveries in 2023 that are assumed for our published schedules," Bob Jordan told a July 27 analysts' call following the release of the airline's second-quarter results. "We are working to build a 2024 plan that should be much more stable. We currently are planning to be flying the B737-7 at some point next year, but if not, we'll take B737-8 instead just as we are doing now."
According to the ch-aviation fleets advanced module, Southwest Airlines presently operates 155 MAX 8s among a wider fleet of all B737-type aircraft. However, the airline also has 192 MAX 7s and 270 MAX 8s on order. Southwest Airlines will be the MAX 7's launch operator. Boeing had expected the type to start operating for Southwest Airlines in 2019. Boeing attributes the five-year delay to more complex and time consuming certification processes.
During the second quarter of 2023, Southwest Airlines received twenty-one B737-8s and retired eleven B737-700s to close the quarter with 803 aircraft in its fleet. All up, across 2023, the airline plans to take delivery of seventy B737-8s and retire twenty-six B737-700s, for a net gain of 44 aircraft. Southwest Airlines expects to close 2023 with 814 aircraft.
In notes accompanying its latest quarterly update, also released on July 27, the airline said actual deliveries differed from contracted deliveries. Since Southwest's last quarterly update in April, the airline has exercised options for nineteen B737-7s for delivery in 2024 and converted firm orders for sixteen B737-7s with 2024 delivery dates to B737-8 orders.
"(Southwest) continues to include the remaining 46 of its 2022 contractual undelivered aircraft (fourteen B737-7s and thirty-two B737-8s) within its 2023 commitments," the notes read. "(Southwest Airlines) is working to reflow its order book with Boeing in a way that provides orderly and measured growth in 2024 and beyond."
As of July 27, Southwest's contracted deliveries stood at;
2023 - thirty one B737-7s, plus 105 B737-8s, for a total of 136 contracted deliveries;
2024 - fifty one B737-7s, plus thirty-five B737-8s, for a total of 86 contracted deliveries;
2025 - thirty B737-7s, plus options for fifty-six either B737-7 or B737-8 types, for a total of 86 contracted deliveries;
2026 - thirty B737-7s, plus fifteen B737-8s, plus options for 40 either B737-7 or B737-8 types, for a total of 85 contracted deliveries;
2027 - fifteen B737-7s, plus fifteen B737-8s, plus options for six either B737-7 or B737-8 types, for a total of 36 contracted deliveries;
2028 - fifteen B737-7s, plus fifteen B737-8s, for a total of 30 contracted deliveries;
2029 - twenty B737-7s, plus thirty B737-8s , for a total of 50 contracted deliveries; and
2030 - fifty-five B737-8s.
Southwest has included 46 of its 2022 contracted but undelivered aircraft (fourteen B737-7s and thirty-two B737-8s) within its 2023 commitments. However, the 70 actual B737-8 deliveries in 2023 will fall substantially short of the 135 contracted deliveries. "The delivery timing for the B737-7 is dependent on the Federal Aviation Administration issuing required certifications and approvals to Boeing and the airline," the notes read. "The FAA will ultimately determine the timing of the B737-7 certification and entry into service." Southwest Airlines notes that it can designate firm orders or options as either B737-7s or B737-8s.
Assuming those 70 aircraft deliveries planned for 2023 stick, Southwest Airlines says it will spend approximately USD2.3 billion in aircraft acquisition costs this year.

CH Aviation