Southwest Airlines removes MAX 7 from 2024 plans, cuts delivery forecast from Boeing
Reuters
Published Jan 25, 2024 06:39AM ET
By Abhijith Ganapavaram
(Reuters) - Southwest Airlines (NYSE:LUV) said on Thursday it was expecting to take fewer deliveries of Boeing (NYSE:BA)'s 737 MAX aircraft and it had left out the MAX 7 model, which is mired in certification delays, from its 2024 fleet plans.
The U.S. budget carrier, one of Boeing's loyal customers, expects to take delivery of 79 MAX aircraft this year, compared with its previous estimate of 85, due to the planemaker's supply-chain challenges and the current status of the MAX 7 certification.
"The company's current capacity plans do not assume placing the MAX 7 in service this year and is subject to Boeing's production capability," Southwest said in a statement.
However, with the U.S. Federal Aviation Administration (FAA) barring Boeing from increasing its MAX production, some airlines could be "significantly" impacted by any freeze on higher production, though a shortage of jets could increase carriers' ticket pricing power.
Southwest's move to remove the smaller MAX 7 from its fleet plans follows United Airlines' announcement earlier this week that it would build a fleet plan without the larger MAX 10, certification of which is also likely to be delayed.
Southwest, the largest customer of the MAX 7, told Reuters in November last year it was expecting the plane to be certified by the FAA by April, allowing it to start flying the aircraft in October and November this year.
On Thursday, the airline said it had accelerated a small number of MAX 8 orders and converted three 2025 MAX 7 firm orders to three 2024 MAX 8 firm orders.
Dallas-based Southwest reported a fourth-quarter net loss of $219 million, or 37 cents per share, nearly unchanged from last year, due to a $426 million operating expense driven by an increase in the ratification bonus for pilots as part of a new contract.
Total revenue for the quarter rose 10.5% to $6.82 billion.
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Written By: Reuters
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