Everyone in aviation knew Southwest was going to place a serious new order with Boeing for the new, “Max” version of the 737, but the size of the order, 208 new aircraft valued at $19 Billion was still a shocker. The more fuel-efficient Max engines are new and Southwest will be Boeing’s first Max operator. Southwest has had a policy of using various models of the Boeing 737 exclusively and is now the the largest client of the aircraft worldwide.
So how good is the new plane? Experts say fuel savings should average between 15-18% of the current “fuel burn rate”, a significant savings over the long haul. Consumers are generally unaware of the fact that fuel costs for the major US carrier’s has now replaced labor costs as the single biggest expenditure with a direct relationship to ticket pricing. By being the first to purchase, industry observers feel that Southwest won considerable discounts from Boeing. The deliveries of the 350 new planes will add more than $1 billion annually to Southwest’s operating expenses,
One of the driving reasons for the huge purchase at this time, is thought to be Southwest’s purchase of rival AirTran Holdings. AirTran operates a number of aircraft that Southwest will want to replace with the new Max 737 models. The plane’s are thought to be 7-8% more fuel efficient then current aircraft in the fleet.
So how long does it take to deliver 208 new aircraft valued at between $76 and $101 million each? This largest order in aviation history will not be completed until 2022 based on current contracts.
