Southwest Airlines (LUV), a top Boeing (BA) 737 customer, says it could need up to 500 new aircraft as it expands routes across the U.S. in the waning days of the coronavirus pandemic. Boeing stock rose.
The discount carrier has opened up routes to 17 new destinations during the Covid-19 pandemic, including flights to Eugene, Ore., and Myrtle Beach, S.C. In recent weeks Southwest expanded its flight offerings to Hawaii as Americans are ready to travel amid rising vaccination rates.
“We’re going to have to acquire more airplanes to be able to restore the rest of our route network,” CEO Gary Kelly told the Dallas Morning News. “And now that travel demand is coming back to life, we need to restore that capacity, and it will take us a while because we’ve diverted airplanes to these new markets.”
In March, Southwest ordered 100 more 737 Max jets. In total, the carrier has over 300 Boeing jets on order and options for over 100 more.
Any new planes will be Boeing 737 jets.
“We’re not thinking about another airplane at all,” Kelly told the Dallas Morning News. Southwest had reportedly been considering the Airbus (EADSY) A220 before deciding on the Boeing 737 Max jet in March.
Shares jumped 3.9% to 250.70 on the stock market today. Boeing stock is bouncing above its 50-day line as it consolidates with a 278.67 buy point, according to MarketSmith chart analysis. Southwest shares edged up 0.85% to 61.73.
Airbus’ U.S.-listed shares soared 8.85% Thursday, gaping out of a base, after the European aerospace giant announced plans for steep production increases amid signs of improving demand.
Boeing’s archrival will boost A320neo output by more than 10% to a rate of 45 per month by the end of 2021. Airbus is also targeting 64 a month by Q2 2023, above its record of 60 a month and up from a pre-pandemic goal of 63.
Boeing also plans to increase production and reportedly is looking at a rate of 42 737 jets per month by the fall of 2022, accelerating from 31 a month in early 2022.
That comes as the order book has seen new life after the 737 Max was grounded for 20 months following two deadly crashes. Ryanair (RYAAY), Alaska Airlines (ALK), United Airlines (UAL) and Dubai Aerospace Enterprise have ordered more 737 Max jets since December.
While orders are picking up, Boeing is still dealing with some 737 Max issues. On Thursday, Boeing agreed to pay $17 million in fines as part of a Federal Aviation Administration settlement over installing unapproved sensors on 737 Max and 737 Next Generation aircraft.
Follow Gillian Rich on Twitter for aerospace news and more.
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