SOUTHWEST CUTS 737 MAX DELIVERIES TO 35 THROUGH 2021
Plane’s grounding and pandemic have gutted travel, hurt airlines
Southwest Airlines cut the number of 737 Max jets it will take through next year to 35, as it joined other carriers in reducing revenue forecasts amid a nationwide surge in coronavirus cases.
Southwest, the largest operator of the Boeing aircraft, also settled with the manufacturer over deliveries scuttled this year, after the plane was grounded following two crashes that killed 346 people. While the terms of the agreements are confidential, delivery credits and other factors mean Southwest will have “an immaterial amount” of capital spending for aircraft this quarter and for all of 2021, the airline said in a regulatory filing.
The announcements Wednesday ref lect adjustments that airlines are making worldwide: first to the Max’s extended f light ban, and then to a coronavirus pandemic that has gutted demand
for travel and shows no sign of letting up in the near term.
The 35 Max planes that Southwest will receive include seven expected this month and just 28 next year. The carrier in April cut delivery plans to as many as 48 through 2021. At one point, Southwest was on tap to get 123 of the workhorse narrow-body jet over the period.
While Southwest has signaled an interest in taking Max planes in the future that have lost their original buyers, the airline said it would hold its f leet unchanged next year from the 747 jets it had at the end of 2019. Deliveries through the end of 2021 will include 16 leased aircraft.
U.S. regulators last month approved the Max’s return to f light, following a global grounding that began in March 2019. Southwest expects to make its first commercial Max f light in March, after training all its pilots on changes made to the plane. Southwest had 34 Max aircraft in its f leet that it couldn’t operate during the 20-month grounding, the longest in U.S. history.
Southwest on Wednesday also reduced its forecast for December operating revenue to be as much as 75 percent below a year earlier. The airline previously expected no more than a 65 percent drop. Southwest projected a decline of 65 percent to 75 percent for January. Capacity for that month will be down as much as 45 percent, rather than the 40 percent previously anticipated.
“Leisure bookings for holiday travel in late December 2020 and early January 2021 are outpacing leisure passenger demand and bookings in nonholiday time periods for both months,” the airline said. “The company remains cautious, given the uncertainty of near-term revenue trends.”