Southwest Airlines has placed an order for an additional 108 Boeing 737-7 Max jets, the aircraft manufacturer announced Thursday. The carrier is the launch customer for the variant and it has increased its orderbook to more than 300, according to Boeing.
The 737-7 has the longest range in its class, capable of flying up to 3,800 nautical miles and carrying up to 172 passengers, according to Boeing.
“This sets us up for orderly and measured growth and gives us flexibility to adapt in a dynamic environment, and we have a lot of options as we move forward,” Southwest CEO Bob Jordan said on a Thursday earnings call.
Jordan also noted that the carrier’s managed business is “continuing to come in largely as expected, but overall, demand remains healthy.” Southwest chief commercial officer Ryan Green reiterated seeing “stable business travel patterns,” adding that there also is a “healthy leisure booking demand.”
In addition, the carrier’s newly enhanced meetings product, which is tied to its corporate portal already has generated “millions of dollars in travel booked on the new tool in just the first few days,” Green said, adding that meeting, incentives and conventions is one of the fastest growing segments in the managed business travel space.
Southwest also recently reduced the number of Rapid Reward points needed to reach status levels. Green said the reason for that move in part was that, while the carrier has the same number of customers traveling for business as it did before the pandemic, “those individuals are flying a bit less frequently,” he said. “We’ll benefit from that, too, because more customers will be able to stretch for A-List and A-List Preferred, which drives value back to us.”
Southwest Q3 Metrics
Southwest reported record third-quarter revenue of more than $6.5 billion, a 4.9 percent increase year over year. Passenger revenue for the quarter was $5.9 billion, a 5.3 percent increase from Q3 2022. Net income was $193 million, down from $277 million a year prior.
Fourth-quarter guidance includes a capacity increase of about 21 percent year over year and average fuel costs of $2.90 to $3.00 per gallon. For the year, Southwest projects capacity to increase 14 percent to 15 percent, with fuel $2.85 to $2.95 per gallon, which is higher than previous estimates.
The carrier now is flying its full fleet and in the fourth quarter is completing the restoration of its network, Jordan said. As Southwest moves into 2024, it is slowing its capacity growth rate “to absorb current capacity, mature development markets and optimize schedules to current travel patterns.” The company now projects Q1 2024 capacity growth of 10 percent to 12 percent year over year, which is a reduction from previous estimates of 14 percent to 16 percent, Jordan said.
