Southwest Airlines has juggled an unpredictable new-aircraft delivery schedule for years, but with Boeing getting back on track, the all-737 operator is harvesting the benefits of prolonging the service lives of hundreds of its older 737s.
“We’ve got north of 450 NGs that we’ll be retiring for years and years to come, well into the next decade,” Southwest CFO Tom Doxey said on the carrier’s most recent earnings call. “As you spend on maintenance, especially on used assets, that brings a lot of economic value into those assets.”
Southwest took delivery of 13 737 MAX 8s last quarter and disposed of 10 older 737s. It sold four 737-800s and one 737-700 and retired five 737-700s. Its full-year projections see 64 new deliveries and 60 aircraft leaving the fleet.
“I think Q3 is going to be a little bit elevated versus Q1 and Q2, Q4 probably looks a lot like Q1 and Q2,” Doxey said of the expected sales and retirements.
Boeing’s steadily increasing monthly delivery totals mean airlines can finally dispose of older, less efficient units not needed to meet demand. In many cases, that means selling or retiring 737NGs. Airlines that need the lift will take midlife aircraft, and engines with green time will be used as well. Companies will eagerly part out the rest and generate much-needed used serviceable material (USM) that has been in short supply during the delivery bottleneck, particularly for CFM56 engines.
“The underlying assets, aircraft, engines, and other assets—that market is strong, and we think it’ll be strong for the foreseeable future,” Doxey said. “As we sell assets into the market, we benefit from that strength.”
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