WASHINGTON/LOS ANGELES – WestJet’s plan to order 65 MAX family aircraft will stretch out its expansion and leave the carrier with a more modern fleet by pushing deliveries into the future and swapping 737NGs for ’s newer narrowbody twin.
The letter of intent (LOI), announced Aug. 29, calls for WestJet to substitute 15 737NG orders slated as 2014-2018 deliveries for 737 MAXs, meaning the deal adds a net of 50 aircraft to the carrier’s backlog.
Prior to the LOI, WestJet was slated to take delivery of 27 new -700s and 12 new -800s from 2014-2018. The -700 delivery dates are spread among the five years, while the -800s are on the books for 2014 and 2015. It is not clear which NG orders would go as part of the LOI, and WestJet did not immediately answer a request for clarification.
The carrier’s MAXs would arrive starting in September 2017 and continue through 2027. The LOI calls for WestJet to take 40 -8s and 25 -7s, but the carrier has substitution rights for -9s.
Current firm orders for the 737 MAX series stand at 1,495, including 1,284 -8s, 181 -9s, and 30 -7s.
The LOI is part of WestJet’s broader effort to cut about $100 million in costs by 2016 while maintaining steady growth. In May, WestJet reached a deal to sell 10 737-700s to Southwest as part of the U.S. carrier’s effort to add cost-friendly capacity while it awaits its own 737 MAX deliveries.
The -700s are slated to change hands between September 2014 and May 2015 at the rate of about one per month. Prior to the LOI, plans called for WestJet to take 10 new Boeing 737-800s over the same time period, which would help lower the carrier’s average fleet age by about one year, to 5.7, and boost capacity.
WestJet’s recently reconfigured 737-800 interiors have 174 seats, or 38 more than the revamped 737-700s, giving the carrier a 28% per-aircraft capacity bump. Company executives said during the carrier’s second-quarter earnings call July 31 that the airline plans to bump capacity by 4%-6% next year. The growth will come largely through higher-capacity -800s coming into the fleet, though about 2% will come via the ramp-up of Encore, WestJet’sDash 8-operating regional subsidiary. Encore will add markets and operate on some thin WestJet routes, allowing the mainline carrier to redeploy its 737s where there is more demand.
Counting the LOI, the fleet changes would leave WestJet with 92 outstanding commitments to Boeing 737s, including two -800s slated for delivery by year’s end. The carrier’s current fleet includes 103 737s and four Bombardier.
“WestJet notes that as a result of the flexibility built into its fleet plan ... the fleet could be as large as 162 737 Boeing aircraft or as few as 120 737 Boeing aircraft a decade from now,” the carrier says in a statement on the LOI.
Lease expirations/extension options in the coming years give the carrier tremendous fleet flexibility. It has three -700s leases up for extension in 2014, and is considering letting each of those aircraft go. It has a total of 33 more aircraft with lease extension options up for consideration from 2015-2018.
“I call this our ripcord,” President and CEO Gregg Saretsky said at an analysts’ conference earlier this year. “It provides us [a] tremendous amount of flexibility as we think about all of the things that could happen over the course of the next half decade.”