Airline building on healthy growth
Dallas-based Southwest Airlines Co. plans to announce within the next few weeks its largest order of new airplanes in its 29-year history, according to two people familiar with the matter.
The nation's seventh-largest carrier is expected to order significantly more than 50 new 737-700s from the Boeing Co., the individuals said, adding that the order signals that the low-fare carrier is preparing for plenty of new growth over the next few years.
A Southwest spokesman declined to comment about the order.
Assuming the airline continues adding to its fleet at a rate of 10 percent each year, Southwest would need as many as 106 new 737-700s over the next four years, including the 54 planes that are already on order for these years.
Southwest is steadily expanding the number of flights in its existing route network while adding additional cities. It currently flies to 56 U.S. cities. It began flying to Albany, N.Y., its newest city, in May, and plans to announce its next destination soon.
The airline's growth is reflected in the increasing size of its fleet of Boeing 737s, the only aircraft it uses. This year, Southwest plans to spend $688 million to take delivery of 31 new 737-700s, giving it a total fleet of 343 planes, not counting any retirements or purchases and leases of older aircraft.
This year's delivery of new 737s comes on top of 32 new aircraft received in 1999, when Southwest launched service to three new cities. Before last year's order, the carrier had increased its fleet by 18 to 19 new planes annually during the three preceding years.
The airline is slated to take delivery of 23 new aircraft in 2001; 21 in 2002; five in 2003 and five in 2004. It has options to purchase 62 planes during 2003 to 2006, all of which could be converted into firm orders as part of its new purchase.
Until now, the biggest jet order from Southwest occurred in 1992, when the carrier announced it would spend $1.2 billion for 34 Boeing 737-300s to be delivered from 1995 to 1997.
The 737-700 is Southwest's most advanced aircraft. The plane, which Southwest equips with 137 seats, carries a list price of $43.5 million to $51.5 million, according to Boeing. But Southwest pays significantly less than that under its contracts with the Seattle-based aerospace giant.