A Southwest Airlines aircraft at Boeing’s Renton facility.
Southwest Airlines said March 29 it will buy 100 new Boeing 737 Max7s to phase out older aircraft. This is the largest order Boeing has received since the 737 Max returned to commercial flight, giving the company a huge sigh of relief at a time when it has been hit by both the grounding and the “Chinese Communist virus” outbreak.
The 737 Max7 is the smallest of the Boeing Max family of aircraft. In addition to the 100 new orders mentioned above, the agreement includes an option to purchase 155 additional 737 Max7s or Max8s through 2029. At the same time, Southwest Airlines converted 70 Max8 aircraft to Max7 models when it confirmed an order for Max8s.
The 737 Max was grounded worldwide in mid-March 2019 after two serious air crashes in five months that killed 346 people. The Federal Aviation Administration (FAA) approved the return of the aircraft in November last year, and the ban was lifted in Europe in January this year, with other countries following suit.
The grounding has caused Boeing huge losses. At the same time, as the epidemic severely impacted air travel demand, many airlines have idled their planes over the past year and have subsequently cancelled orders for new aircraft or delayed deliveries, adding to Boeing’s situation.
Southwest Airlines said the new order is a vote of confidence in the company’s 737 Max model, and expects the first 30 aircraft to be delivered next year.
The Wall Street Journal reports that Southwest’s fleet is made up entirely of Boeing 737s, but that the company has been reassessing that strategy for some time. The latest order means Boeing is relieved to be able to lock in its most important customer again. Southwest executives have long argued that operating similar aircraft would simplify operations and save on maintenance and training costs, the report said.
CNBC reported that the Max7s are priced at $99.7 million each, but airlines usually get deep discounts for bulk orders, especially during an epidemic, said Richard Aboulafia, vice president of analysis at the Teal Group, adding that Southwest would get a big discount for the order.
At the close of trading on the 29th, Boeing shares were up 2.3 percent at $250.52, while Southwest shares were down 0.5 percent at $60.96.
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