Southwest Nears Big Jet Deal in Boost to Smallest Boeing Max

(Bloomberg) -- Southwest Airlines Co. is closing in on a large order for Boeing Co.’s 737 Max 7 jetliners after weighing a rival Airbus SE model, according to people familiar with the matter.

The talks have been underway for months and are in the final stages as the largest Max customer prepares to resume flights with the plane Thursday, said the people, who asked not to be named because the discussions are confidential. Southwest is studying a deal in the range of 150 to 200 firm orders and commitments for the jet, one of the people said Wednesday.

The Dallas-based carrier has determined that it may eventually need a fleet of about 300 aircraft to replace the Boeing model at the heart of its operation, the 737-700, the people said. In addition to the Max 7, Southwest also considered ordering Airbus’s A220-300, a move that would have diversified the airline’s all-737 fleet and severed its exclusive relationship with Boeing.

For the U.S. planemaker, retaining Southwest would represent an important victory as the Max returns to the skies following two deadly crashes and the longest jetliner grounding in U.S. history. Southwest Chief Executive Officer Gary Kelly approached the carrier’s board about considering other aircraft types in October 2019, seven months after the flying ban began. The board initiated a formal review last year.

Read more: Southwest Sets Boeing Max’s Return Amid Flirtation With Airbus

The coronavirus pandemic and resulting slump in travel demand have presented the best opportunity for Southwest to consider whether to add another aircraft type to its fleet, Kelly has said. Pressures from the pandemic “changed our priorities quite a bit,” he said late last year.

The Max 7, a slow-selling model with 150 seats, was a “major component” of negotiations with Boeing as Southwest sought to rework schedules for its Max deliveries, he said. The airline has a need for a smaller plane on some routes than its current 175-seat Max model, and Chief Operating Officer Mike Van de Ven reiterated that Southwest was still considering the A220.

Reuters reported earlier that Southwest was close to ordering dozens of Max jets.

Boeing and Airbus declined to comment. Southwest declined to comment on discussions about future fleet decisions.

‘Single Fleet’

“We’re marking 50 years as a single fleet airline and have shared consistently our hope to keep that simplicity,” the airline said. “We’ve also shared that we consistently evaluate the performance and availability of other fleet types that could potentially work within our strategy and business model.”

Adding Airbus jets to the airline’s all-737 fleet would require major changes in flight operations, pilot training, parts inventory and other items. Van de Ven said last year that a decision likely would have to be made by the latter part of 2021 to get the selected 150-seat aircraft on Southwest’s property by 2025.

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