The 737 Max7 is the smallest of the Boeing Max family of aircraft. In addition to the 100 new orders mentioned above, this agreement includes an option to purchase 155 additional 737 Max7 or Max8 models 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 the company has been reassessing that strategy for some time now. And the latest order means Boeing is breathing a big sigh of relief as it is able to lock up this most important customer once again. Southwest executives have long argued that operating similar aircraft would streamline 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 ordering large quantities, especially during an epidemic, said Richard Aboulafia, vice president of analysis at The Teal Group, adding that Southwest will 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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