Southwest hits brakes on Max deliveries, settles Boeing dispute

SOUTHWEST Airlines cut the number of 737 Max jets it will take through next year to 35, as it joined other carriers in reducing revenue forecasts in the Covid crisis, reports Bloomberg.

Southwest, the largest operator of the Boeing aircraft, also settled with the manufacturer over deliveries scuttled this year, after the plane was grounded following two crashes killed 346 people



While the terms of the agreements are confidential, delivery credits and other factors mean Southwest will have 'an immaterial amount' of capital spending for aircraft this quarter and for all of 2021, the airline said in a regulatory filing.



The announcements reflect adjustments that airlines are making worldwide: first to the Max's extended flight ban, and then to Covid crisis that has gutted demand for travel and shows no sign of letting up in the near term.



The 35 Max planes that Southwest will receive include seven expected this month and just 28 next year. The carrier in April cut delivery plans to as many as 48 through 2021. At one point, Southwest was on tap to get 123 of the workhorse narrow-body jet over the period.



While Southwest has signalled an interest in taking Max planes in the future that have lost their original buyers, the airline said it would hold its fleet unchanged next year from the 747 jets it had at the end of 2019. Deliveries through the end of 2021 will include 16 leased aircraft.



US regulators last month approved the Max's return to flight, following a global grounding that began in March 2019. Dallas-based Southwest expects to make its first commercial Max flight in March, after training all its pilots on changes made to the plane. Southwest had 34 Max aircraft in its fleet that it couldn't operate during the 20-month grounding, the longest in US history.



Southwest also reduced its forecast for December operating revenue to be as much as 75 per cent below a year earlier. The airline previously expected no more than a 65 per cent drop. Southwest projected a decline of 65 per cent to 75 per cent for January. Capacity for that month will be down as much as 45 per cent, rather than the 40 per cent decline previously anticipated.


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