Southwest Reportedly Plans to Buy 90 Boeing 737 Jets
Southwest Airlines Co. will announce as soon as today that it will buy more than 90 Boeing Co. planes for about $4 billion in the low-fare airline’s largest order ever, people familiar with the matter said.
The No. 7 U.S. carrier also plans to take options and other purchase rights that could boost the total order to about 300 aircraft, with deliveries expected through 2012, the sources said. Southwest and Boeing officials declined to comment.
The order is a sign that 29-year-old Southwest, among the fastest-growing U.S. carriers, expects to continue expanding as it presses into new markets on the East Coast. For Seattle-based Boeing, the order is an important victory over rival Airbus Industrie. Southwest flies only Boeing 737 jetliners.
The carrier “has clear growth plans plus a sizable fleet of older planes which must eventually be phased out,” said Richard Aboulafia, director of aircraft consulting at the Teal Group in Fairfax, Va. “It makes sense to stake out good positions on the production line.”
Southwest shares rose 2 cents to close at $19. 52 on the New York Stock Exchange.
The airline is buying Boeing’s 737-700 models, a medium-range jet that seats 126 to 149 people. The Dallas-based carrier configures the planes to seat 137 passengers in a single class. Southwest plans to use the jets to open new routes and eventually replace older 737-200, 737-300 and 737-500 aircraft.
Southwest has been growing at more than twice the rate of most U.S. competitors as it expands into new cities, such as service from Buffalo, N.Y., announced last week. It’s been buying more planes to serve the new routes.
As of the end of March the airline operated 315 Boeing 737s, up 9.8% from March 1999. Southwest flies just one type of plane because it believes the strategy simplifies maintenance, training and scheduling.
The practice also can speed turnaround times at airport gates.
Passenger demand has kept pace with growth. In May, for instance, Southwest raised its available seating capacity by 15.5% and passenger traffic rose 16.1%.
