XR650R
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By DAVID KESMODEL And DANIEL MICHAELS
Southwest Airlines Co. is nearing a preliminary deal to order more than 100 of Boeing Co.'s planned 737 Max jetliners, according to people familiar with the matter.
Boeing and Southwest, one of the biggest operators of Boeing's workhorse single-aisle planes, could announce the planned order in the coming weeks, although details are still being worked out, the people said.
The commitment by Southwest would mark the latest boost to Boeing's sales prospects for the 737 Max, a revamped version of its top-selling plane that will carry new, advanced engines. Boeing plans to deliver the first 737 Max in 2017—two years behind a competing Airbus jet called the A320neo that has garnered more than 1,400 firm orders and commitments.
Boeing officials have said in recent weeks that they have lined up about 700 commitments to the 737 Max. It is unclear if Southwest's order would be part of those or if it would add to that number.
A person briefed on the talks between Boeing and Southwest said the discount carrier may order as many as 150 of the planes. The deal that would be announced wouldn't be a firm order, but a commitment by Southwest to hold production slots for the jet.
A Southwest spokeswoman declined to comment about her company's fleet plans.
Chicago-based Boeing still needs to finalize design details, performance specifications and pricing for the planned airplane before it can turn airlines' commitments into firm orders.
Although Boeing hasn't finalized list prices for the 737 Max, its announced value for a recent deal with Indonesia's Lion Air indicated an average list price of about $95 million per plane. Carriers typically negotiate discounts when placing large airplane orders, but that figure would mean the preliminary Southwest commitments for the 737 Max could be worth in the range of $9.5 billion and $14 billion before discounts.
Dallas-based Southwest operated a fleet of 699 Boeing jets as of Sept. 30, according to a federal filing. In addition to Boeing 737 jets, the fleet included 88 Boeing 717-200s—a jet the plane maker no longer produces—that Southwest acquired through its acquisition earlier this year of low-fare rival AirTran Holdings Inc.
As of September, Southwest had firm orders to take delivery of 116 Boeing 737-700s and 28 Boeing 737-800s from this year through 2017.
Southwest would join such carriers as AMR Corp.'s American Airlines and Lion Air in making commitments to the Max. The names of some airlines that have committed to the plane haven't been disclosed.
Boeing formally launched plans to build the 737 Max in August. The company, after years of analysis and discussions with key airline and airplane-leasing customers, decided on a new-engine version of its popular single-aisle plane rather than taking the costlier and riskier approach of building an entirely new jet.
In a September interview, Southwest Chief Executive Gary Kelly said because the Boeing board authorized the Max version, "by definition, a next-generation plane is off the table indefinitely." At that time, Mr. Kelly said Southwest hadn't decided what it would choose as the next airplane to order. "I'm anxious to complete the evaluation of the Max product" and hoping to do so by year-end, he said.
Boeing opted for the new-engine variant in part so it could land part of a big airplane order from American, which was negotiating with both Boeing and Airbus to buy single-aisle jets. The Fort Worth, Texas, carrier, now in bankruptcy proceedings, ended up ordering 260 Airbus A320 planes, ending Boeing's long-running exclusive hold on American orders. American committed to 200 Boeing 737 jets, including 100 of the Max style.
In recent years, the A320 and 737 have more or less split the market for single-aisle planes that seat between 100 and 200 passengers. But since Airbus in December 2010 decided to put new engines on its A320, the company has landed firm orders or commitments for more than 1,400 of the A320neo, which stands for "new engine option."
Boeing has said it plans to finalize the 737 Max's configuration in 2013. The jet will carry LEAP-1B engines from CFM International, a joint venture between U.S.-based General Electric Co. and France's Safran SA.
Boeing has said the new-engine variant will consume fuel at a 10% to 12% lower rate than the current 737s. It says the plane's fuel burn will be 4% lower than the competing A320neo's. Airbus, a unit of European Aeronautics Defence & Space Co., has challenged that claim, saying the A320neo will be more fuel-efficient than Boeing's revamped 737.
—Susan Carey contributed to this report.
Write to David Kesmodel at [email protected] and Daniel Michaels at [email protected]
Southwest Airlines Co. is nearing a preliminary deal to order more than 100 of Boeing Co.'s planned 737 Max jetliners, according to people familiar with the matter.
Boeing and Southwest, one of the biggest operators of Boeing's workhorse single-aisle planes, could announce the planned order in the coming weeks, although details are still being worked out, the people said.
The commitment by Southwest would mark the latest boost to Boeing's sales prospects for the 737 Max, a revamped version of its top-selling plane that will carry new, advanced engines. Boeing plans to deliver the first 737 Max in 2017—two years behind a competing Airbus jet called the A320neo that has garnered more than 1,400 firm orders and commitments.
Boeing officials have said in recent weeks that they have lined up about 700 commitments to the 737 Max. It is unclear if Southwest's order would be part of those or if it would add to that number.
A person briefed on the talks between Boeing and Southwest said the discount carrier may order as many as 150 of the planes. The deal that would be announced wouldn't be a firm order, but a commitment by Southwest to hold production slots for the jet.
A Southwest spokeswoman declined to comment about her company's fleet plans.
Chicago-based Boeing still needs to finalize design details, performance specifications and pricing for the planned airplane before it can turn airlines' commitments into firm orders.
Although Boeing hasn't finalized list prices for the 737 Max, its announced value for a recent deal with Indonesia's Lion Air indicated an average list price of about $95 million per plane. Carriers typically negotiate discounts when placing large airplane orders, but that figure would mean the preliminary Southwest commitments for the 737 Max could be worth in the range of $9.5 billion and $14 billion before discounts.
Dallas-based Southwest operated a fleet of 699 Boeing jets as of Sept. 30, according to a federal filing. In addition to Boeing 737 jets, the fleet included 88 Boeing 717-200s—a jet the plane maker no longer produces—that Southwest acquired through its acquisition earlier this year of low-fare rival AirTran Holdings Inc.
As of September, Southwest had firm orders to take delivery of 116 Boeing 737-700s and 28 Boeing 737-800s from this year through 2017.
Southwest would join such carriers as AMR Corp.'s American Airlines and Lion Air in making commitments to the Max. The names of some airlines that have committed to the plane haven't been disclosed.
Boeing formally launched plans to build the 737 Max in August. The company, after years of analysis and discussions with key airline and airplane-leasing customers, decided on a new-engine version of its popular single-aisle plane rather than taking the costlier and riskier approach of building an entirely new jet.
In a September interview, Southwest Chief Executive Gary Kelly said because the Boeing board authorized the Max version, "by definition, a next-generation plane is off the table indefinitely." At that time, Mr. Kelly said Southwest hadn't decided what it would choose as the next airplane to order. "I'm anxious to complete the evaluation of the Max product" and hoping to do so by year-end, he said.
Boeing opted for the new-engine variant in part so it could land part of a big airplane order from American, which was negotiating with both Boeing and Airbus to buy single-aisle jets. The Fort Worth, Texas, carrier, now in bankruptcy proceedings, ended up ordering 260 Airbus A320 planes, ending Boeing's long-running exclusive hold on American orders. American committed to 200 Boeing 737 jets, including 100 of the Max style.
In recent years, the A320 and 737 have more or less split the market for single-aisle planes that seat between 100 and 200 passengers. But since Airbus in December 2010 decided to put new engines on its A320, the company has landed firm orders or commitments for more than 1,400 of the A320neo, which stands for "new engine option."
Boeing has said it plans to finalize the 737 Max's configuration in 2013. The jet will carry LEAP-1B engines from CFM International, a joint venture between U.S.-based General Electric Co. and France's Safran SA.
Boeing has said the new-engine variant will consume fuel at a 10% to 12% lower rate than the current 737s. It says the plane's fuel burn will be 4% lower than the competing A320neo's. Airbus, a unit of European Aeronautics Defence & Space Co., has challenged that claim, saying the A320neo will be more fuel-efficient than Boeing's revamped 737.
—Susan Carey contributed to this report.
Write to David Kesmodel at [email protected] and Daniel Michaels at [email protected]
