In late April, the internet was abuzz with speculation that Boeing-loyal-airline Southwest was considering aircraft from Airbus. The idea that an airline is shopping around for aircraft wouldn’t normally be big news, but because Southwest is an all-737 fleet – the world’s largest operator in fact – the aviation community took notice. So the question of the day is: Would Southwest ever operate another type of aircraft?
As the website The Air Current and many other sources report, an unwritten deal stands between Boeing and Southwest. That deal says:
“No airline on Earth would ever pay less for a 737 than Southwest”
In fact, the co-founder of the airline once told The Wall Street Journal:
“I doubt that there’s any relationship like it in the history of the airline industry”.
Looking back over the years, that statement rings true as 777 Boeing 737s (various generations) have come directly from Boeing. Of course, the second-hand market has provided the others.
Airbus visit: “unfortunate timing”
But despite the fierce loyalty and the huge benefits that come with operating a single-type-fleet, there’s still the question of what happened in April, when Southwest made a visit to Airbus. The Dallas Business Journal reported what Southwest Chief Executive Gary Kelly said during an earnings call just after the reports,
“I want to be very clear — the timing is a bit unfortunate…And I’ve read speculation that it’s intentional on our part to perhaps consider a change from our current direction with Boeing and the Max, and that is not true…We didn’t reveal that we took this trip…That was a leak by somebody. Again, I just wanted to point out we’re not trying to send any message whatsoever.”
During a Dallas luncheon in April, Kelly is quoted as saying Southwest has “no plans” to alter orders for hundreds more 737 MAX jets.
The impact of the grounding so far
However, those comments were made in April when there was perhaps more optimism that 737 MAX issues would have been fixed sooner. Primarily, in-time for the busy summer travel season. To date the airline has had to make the following adjustments:
- Pull the 737 MAX from schedules until 2020 (the third push-back)
- Delay the retiring of older generation 737s
- Delay its Hawaii expansion
With continued uncertainty regarding the lifting of the ban, could Southwest change its mind? It would have two good reasons to “mix things up”:
- Manage future risk: in case another issue arises with one type of aircraft, the fleet diversity would allow it to continue service.
- Retain customers that are loyal to Southwest but remain dead set against flying on a 737 MAX (even after it’s approved to fly again). This may be a minimal factor.
Not anytime soon…
Even if Southwest were to place an order with Airbus for the 737’s competitor, the A320, the backlog is enormous. Southwest wouldn’t get its order until long, long after the announcement was made.According to Defense and Security Monitor, on June 30th, 2019, Airbus’ backlog was 7,276 jets (of which 6,344, or 87%, are A220 and A320ceo/neo family narrowbodies). FlightGlobal reports that Airbus has a monthly production target of 60 (which is set to rise to 63 in 2021 and 65 in 2022). The Defense and Security Monitor does the math and makes it clear:
“The number of Airbus aircraft to be built and delivered represents 9.1 years of shipments at the 2018 production level.”
So looking at the numbers in combination with Southwest’s longstanding loyalty with Boeing, it just seems unlikely that the airline would want to damage the goodwill it has built up with the manufacturer over the past few decades.
Boeing rewards Southwest with exclusively low pricing and could (or at least should) compensate the airline because of the hits it has taken due to the MAX crisis.
What do you think of this assessment? Is there something that’s missing when making the analysis? Let us know by leaving a comment!