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Thursday, September 28, 2023

Southwest Airlines plans to spend $2.3 billion on new 737 MAX aircraft in 2023

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Southwest Airlines has stated that it anticipates investing about $2.3 billion in new aircraft until 2023.

The United States (US)-based airline expects to receive about 70 Boeing 737 MAX aircraft in 2023, which is 20 fewer than first planned, according to its Q1 2023 financial results statement on April 27, 2023.

Due to the lower number of deliveries, though, Southwest Airlines “is planning on flight reductions in second half 2023, most notably in the fourth quarter, and now expects its 2023 capacity to increase approximately 14 percent to 15 percent, year-over-year, roughly one point lower than the Company’s previous guidance”.

Additionally, it will delay the retirement of one Boeing 737-700 NextGeneration (NG), a model from the earlier 737 generation, until 2024. In total, 26 737-700s will be retired by the airline in 2023.

A recently identified problem at Spirit AeroSystems, one of Boeing’s Tier 1 suppliers, would have an impact on some 737 MAX deliveries, according to the manufacturer.

Due to a “non-standard manufacturing process [that] was used on two fittings in the aft section of certain 737-7, 737-8, and 737 military derivative aircraft”, according to Boeing’s financial filings for Q1 2023, the delays will remove approximately 9,000 seats from its customers’ summer schedules, the manufacturer’s previous statement said.

The airline had $8.3 billion in cash and cash equivalents at the conclusion of the three-month period, with the company’s net change in cash and cash equivalents for the quarter being -$1.1 billion.

Southwest Airlines now forecasts its capital expenditures for 2023 to be $3.5 billion, down from its prior forecast of $4 billion.

“This assumes approximately $2.3 billion in aircraft capital spending, compared with its previous guidance of approximately $2.8 billion, and continues to assume approximately $1.2 billion in non-aircraft capital spending, which includes tens of millions in operational disruption-related investments,” the airline stated.

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