Southwest Airlines (NYSE:LUV) on Monday said it agreed to buy 100 of Boeing’s (NYSE:BA) 737 Max 7 planes as it plans to retire older jets.
The Dallas-based low-cost airline said under the agreement it would convert 70 of its firm orders for Max 8 planes to the smallest jets, the Max 7s. It also added 155 options for 737 Max 7 or Max 8 airplanes through 2029.
"This cost-effective order book with Boeing allows the Company to maintain the operational efficiencies of an all-Boeing 737 fleet to support its low-cost, point-to-point route network," Southwest said in a statement. The airline only operates Boeing 737 planes.
Today's announcement reinforces the Company's confidence in the 737 MAX as the future of the Southwest fleet. This cost-effective order book with Boeing allows the Company to maintain the operational efficiencies of an all-Boeing 737 fleet to support its low-cost, point-to-point route network.
The Company was the launch Customer of the MAX 8 and is scheduled to be the launch Customer of the MAX 7 after also launching prior 737 generations, including the -300, -500, and -700 series.
The Company expects more than half of the 737 MAX aircraft in its firm order book will replace a significant amount of its 462 737-700 aircraft over the next 10 to 15 years to support the modernization of its fleet, a key component of its environmental sustainability efforts.
Southwest is proud of its fuel efficiency improvement of nearly 50% since 2000, and the billions of dollars in capital expenditures committed to the 737 MAX order book reinforces the airline's commitment to further improve fuel efficiency and reduce carbon emissions.
LUV shares took flight 65 cents, or 1.1%, to $61.94, while BA shares jumped $8.81, or 3.6%, to $253.68.
