Southwest Airlines CEO Gary Kelly expects that the 737 MAX will return to service by the fourth quarter. This news comes as the airline works to develop its fleet plans for the future. While the MAX currently remains grounded, Boeing has signaled that there may be an end to the grounding soon the recertification process continues.
Southwest CEO doubles down on the MAX
Gary Kelly posted a video message on Friday, May 29th. In it, he discussed the Boeing 737 MAX making the following comment:
“The MAX return to service work continues and we’re hopeful that it will be flying by the fourth quarter. It’s a great airplane. It’s a superior airplane to the Next Generation 737 that we’re currently operating. It’s the most cost effective plane in terms of fuel and maintenance, and provides a great customer experience.”
Southwest Airlines has a vested interest in getting the MAX back into service. The airline has over 240 MAX aircraft on order with options for over 120 more. This aircraft will play an important role in Southwest’s future after the crisis.
At the end of March, the airline had placed 93 Boeing 737 Next Generation aircraft into long-term storage due to a significant decline in demand. As traffic returns, these aircraft can reenter passenger service. However, there is not much incentive for Southwest to return these particular aircraft to service.
The MAX will keep costs low
Existing, aging Boeing 737s will add on to the airline’s fuel and maintenance costs. Given the company’s current state of affairs, keeping costs down and staying alive means making sure that the airline is saving cash where it can. This is where the 737 MAX comes into play.
Boeing and Southwest have already worked out compensation agreements for currently grounded 737 MAX aircraft. Southwest received a total of $300 million from Boeing in the first three months of 2020. Southwest also has more pending 737 MAX deliveries– 48 in total through the end of 2021. So, after receiving a significant sum from Boeing, locking in what is likely some of the lowest MAX pricing, it is more likely that Southwest will manage to turn a profit on its MAX jets.
These 48 planes, plus the currently grounded ones, can go towards replacing older aircraft. The airline does not need a lot of capacity right now, which means that retiring aircraft early would not leave the carrier in a crunch for jets. In fact, the MAX 8 is bigger than the older Boeing 737-700s meaning that, if it were to take over for 737-700s, it would instantly add capacity on those routes. With an average age of 16 years, expect some of the older 737-700s to exit the fleet in favor of the newer, more efficient MAX jets. The airline has already indicated that the 737-700 retirement plans are flexible and will depend on the state of affairs moving forward.
When will the MAX return to service?
Regulatory agencies will decide when those jets reenter service. For now, however, the process is ongoing and with any luck, the aircraft could be certified in the next few months. Currently, Southwest has removed the 737 MAX through its flight schedules ending on October 30th.
However, if the MAX is recertified before then, expect Southwest to draw out older aircraft or else add capacity where it is needed. In the coming few months, the airline has braced for what Gary Kelly believes will be a “brutal low-fare environment.” The MAX, by lowering airline costs, will also enable Southwest to lower its fares and attract as many customers as possible. For now, however, it remains a ‘wait and see’ kind of approach.
Do you think the MAX will return by the fourth quarter? Will you fly on a Boeing 737 MAX? Let us know in the comments!