Southwest Airlines declined to disclose how much it will pay for each of… (Ted S. Warren, Associated…)
Amid rising airfares and growing airline traffic, Southwest Airlines announced an order of 150 new Boeing jets that are designed to be up to 18% more fuel efficient than many of the older planes being replaced.
The order of Boeing 737 MAX aircraft combined with a previous Southwest requisition of 200 new jetliners amounts to the largest plane order in Boeing history. The Dallas airline will be the first to take shipment of the 737 MAX, a narrow-body plane with a larger, quieter and more fuel-efficient engine than older models.
Southwest declined to disclose how much it will pay for each plane, saying only that it plans to spend, on average, $1.2 billion a year over the next 10 years on the replacement jets.
"The Southwest brand, with this order, is continuing well into the next decade," Southwest Chief Executive Gary Kelly said at a news conference at the airline headquarters.
The planes, to be delivered from 2012 to 2022, will be used primarily to replace older, less-efficient jetliners, such as 737-300s, many of which were built in the 1980s and '90s.
In announcing the order, Kelly cited rising fuel prices as a top concern in the airline industry. He said the 737 MAX will burn 16% to 18% less fuel than 737-300s.
"Really, the 737 MAX is tailor made for our mission," he said, adding that he does not expect to expand the size of the airline's fleet.
Boeing executives were pleased by the jet order. "It truly is Christmas come early for the Boeing company," Jim Albaugh, head of the company's commercial jet unit, said at the Dallas news conference.
Still, industry analysts say the order does not suggest the industry has completely recovered from the recession. After all, they noted that American Airlines ordered 460 new jets worth up to $40 billion from aircraft makers Boeing and Airbus in July but then filed for bankruptcy protection in November.
Ray Neidl, an aerospace analyst for Maxim Group in New York, said Southwest is simply upgrading its fleet to offset higher fuel prices. "This is just the natural course of things," he said.
However, the latest federal statistics show that airfares and demand for airline seats continue to rise.
The average domestic airfare in the U.S. rose to $370 in April, May and June, up 8.5% from the same period in 2010, according to a report Tuesday by the U.S. Bureau of Transportation Statistics. The $370 average airfare, which is not adjusted for inflation, is also 6.5% above the previous second-quarter high of $347 in 2008, according to the bureau.
During the recession, the average fare in the same three-month period dropped to $302 in 2009.
Meanwhile, the nation's airlines also reported carrying 551.8 million domestic and international passengers in the first nine months of the year, a 1.9% increase from the same period in 2010, according to the bureau. The total was the highest for that period since 2008, according to the bureau.