Southwest plans to sell some of its older 737NG aircraft. These will eventually be replaced by newer 737 MAX 8 aircraft, outgoing CFO Tammy Romo said during the carrier’s fourth-quarter earnings call on Thursday.
In 2025, the airline plans to retire 51 aircraft with a goal of operating an all-MAX fleet by 2031. In addition, Romo shared, the carrier is weighing whether to sell 10 737-800 aircraft.
All of this would be dependent on Boeing delivering 38 new jets to the airline.
“These are midlife aircraft that currently have highly favorable market valuations,” she added. The airline currently has around 200 -800NG aircraft in its fleet.
“The current market setup and our order book economics combined to create an opportunity to replace these midlife -800s with new [MAX 8s],” Romo continued. “This creates value for Southwest as we plan to realize the lower maintenance and fuel costs, enhanced customer experience, and better reliability associated with [MAX 8] aircraft, all with reduced capital spending.”
Southwest is contractually set to take delivery of 136 new Boeing jets this year, including the yet-to-be-certified MAX 7. However, the airline is conservatively planning to receive only 38.
“So you can understand that our strong preference is to execute sales. The -800 sales facilitate capital-efficient fleet modernization, and for the [MAX 8] the opportunity is to harvest significant embedded value,” Romo said.
The airline completed several sale-leaseback transactions in 2024.
Boeing Optimism
Even with conservatively planned delivery numbers, Southwest CEO Bob Jordan said the beleaguered manufacturer “appears to be on a good path.”
Jordan visited Boeing’s Renton, Washington, factory last week, he said.
“They have clearly been hard at work, and I was pleased with the progress that I saw. Everyone was engaged and focused, and while they still have much work to do, they appear to be on a good path and we’re feeling more optimistic,” he shared.
But Jordan added that “we think it’s prudent to hedge our bets.”
