Southwest Airlines wants to add 125 to 140 planes to its fleet by the end of 2023 as it tries to bounce back from cutbacks during the pandemic.
With seats increasingly full heading into the summer travel season, Southwest chief financial officer Tammy Romo said demand is strong from customers and the company needs more aircraft from Boeing to continue growing.
“One of our priorities is restoring our network,” Romo said Thursday at the Wolfe Transportation and Industrials Conference in New York. “That’s probably 125 airplanes’ worth of growth, and we’re hoping that we are restored by the end of next year.”
However, much of that depends on Boeing’s bid to get the 737 Max 7 certified soon so it can start deliveries this year, since most of Southwest’s orders for 2023 and beyond are for the smaller 737 Max variant. The FAA has moved cautiously to certify jets, particularly with Boeing, since it was forced to ground all 737 Max planes in 2019 after two deadly crashes overseas.
Dallas-based Southwest is among several airlines trying to bounce back after reducing capacity in 2020 and 2021, but it is facing headwinds including a shortage of pilots and flight instructors along with slow deliveries from its sole aircraft manufacturer, Boeing.
Southwest said Thursday that it expects revenue to be up in the second quarter as airfares rise with demand, overcoming fuel price hikes. However, capacity is down about 7% for the quarter compared with the same period in 2019 after initial hopes that flying could return to pre-pandemic levels.
Now Southwest said it hopes to grow to take advantage of increasing demand.
Adding 125 new plans would bring the carrier’s fleet to more than 860 jets, the largest number in company history after being restrained in recent years by production slowdowns at Boeing since the onset of the pandemic and the grounding of the 737 Max. Southwest leaders have talked about expanding by up to 500 planes in the past, but actually getting those jets has proved more difficult.
Southwest needs new planes to keep up with growth. It has added 18 locations since the COVID-19 pandemic was declared in March 2020. That includes second airports in cities such as Chicago O’Hare and Houston’s George Bush Intercontinental, smaller destinations such as Eugene, Ore., and Bellingham, Wash., along with vacation spots such as Myrtle Beach, S.C., and Bozeman, Mont.
But that has meant cutting back flights throughout the rest of its network, including places such as Dallas Love Field, the company’s headquarters airport, which has 8.6% fewer scheduled flights with Southwest this month than it did in May 2019, according to flight schedule tracker Cirium.
Southwest doesn’t plan to add any destinations in the coming years after accelerating expansion plans during the pandemic, chief commercial officer Andrew Watterson said this month during the company’s annual shareholder meeting.
But it does need planes to get back to optimal flight levels elsewhere in the country.
Southwest has firm orders for 102 new 737 Max 7 and Max 8 jets this year and options for a dozen more. By the end of this year, the carrier plans to retire about 28 older-generation 737 jets, which are louder and less fuel-efficient than the new models.
For 2023, the company could get as many as 90 new 737 Max 7 and Max 8 planes and is scheduled to retire 30 to 35 jets. Those 90 planes on order for next year include options for 13 jets, which it appears Southwest is poised to exercise if Boeing can deliver.
In April, Southwest converted dozens of Max 7 orders to Max 8 orders to get planes that are certified.
737 Max 8 jets, which are certified and can be delivered when Boeing has jets available, make up 81 of Boeing’s 102 planes on order for this year, with the balance being the Max 7 line, which is still waiting for Federal Aviation Administration approval.
Southwest’s fleet has hovered between 700 and 750 jets for the past seven years, even with massive orders for Boeing jets. Today the fleet is 28 planes smaller than when it peaked at 750 planes at the end of 2018.
Even with new jets, Romo said Southwest is still constrained by the number of pilots it’s able to hire and train. Southwest has ramped up hiring and already added about 250 pilots this year as the industry nears record pilot hiring levels only halfway through 2022, according to pilot hiring advisory firm FAPA.aero.
“The pacing factor for our growth has been more specific to the pilots,” Romo said. “And even more specific than that, the flight instructors.”
Romo said the company has “made a lot of progress with our flight instructor” hiring.
