Southwest signals jet search

Max troubles has Boeing-reliant airline looking at flexibility

Southwest Airlines, the largest customer of the 737 Max and long an all-Boeing airline, insists it has "no current plans" to fly any jets other than the 737. But it's at least looking around.

The airline's management has proposed new language in the contract with its flight-attendants union that would grant it the flexibility "to fly more narrow-body aircraft types."

Southwest told the union in a proposal this month that the ability to operate aircraft other than the 737 "would give us the flexibility ... to better compete and grow."

"We are flying to more destinations that vary in distance, size and seasonality," the company's proposal states. "This change would allow us to fly aircraft types that are better suited for some of the markets we serve."

The grounding of Boeing's 737 Max has hit Southwest hard. The airline has 280 of the jets on order, of which 34 were delivered and in passenger service before the grounding.

Jon Weaks, president of the Southwest Airlines Pilots Association, said in an interview that the carrier's chief executive, Gary Kelly, "has bet the company on the Max."

The airline has parked its current fleet of Max jets at an airfield in Victorville, Calif. And it has another 41 contracted Max deliveries for the remainder of this year that Boeing will hold until it gets clearance for the jet to fly passengers again. At this point, those aircraft won't be in service until next year.

The 75 jets parked or awaiting delivery represent 10% of Southwest's active fleet of 750 aircraft, putting the low-cost-carrier at a competitive disadvantage against other airlines with fewer Max jets or, as is the case with rival Delta, none.

In April, as anger against Boeing built among U.S. airline pilots after the second Max crash in Ethiopia, Weaks wrote a memo to association pilots noting that some were questioning the wisdom of an all-737 fleet.

Weaks wrote that his pilots as well as Wall Street analysts have discussed "the advantages and disadvantages of an airline having a single fleet and having aircraft from only one manufacturer."

He also referred to Boeing's size and influence in the aerospace world "and the antitrust issues that accompany this long-overlooked issue."

This year, there was speculation that Southwest might buy the new Airbus A220, an all-new jet formerly known as the CSeries that the European jet maker acquired from Bombardier of Canada. Delta is now using that fuel-efficient plane, which is small but offers the cabin comfort of bigger jets, to connect city pairs with high business demand, including Seattle-San Jose, Calif.

At a conference in March, five days before the second Max crash, Kelly admitted that Southwest has looked at the A220 but said that was just normal due diligence to assess all options.

"As new technology comes onto the market, I think we're compelled to look at that," Kelly said. But he added that it would take "a really compelling business case for us to deviate from" the current all-737 fleet.

That was before the Max was grounded. Asked again on an earnings call last month about whether he might look at buying different jets, Kelly said it's a longer-term strategic decision that wouldn't solve the immediate problem.

"I think it's something that needs to be fully explored and debated, and that's not something we're going to do in 90 days," he said. "As a practical matter, if we want to diversify the fleet, it would take us years."

Asked if Airbus is "circling you more aggressively" during the Max crisis, Kelly said, "Yes, that's always the case." But he again insisted that "right now, we don't see that we need a change in strategy."

Responding by email to an inquiry Tuesday, Southwest spokeswoman Beth Harbin said, "Southwest has no current plans to pursue or introduce a new fleet type."

Business on 08/15/2019

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