{"id":64839,"date":"2024-06-15T11:59:58","date_gmt":"2024-06-15T06:29:58","guid":{"rendered":"https:\/\/aviationa2z.com\/?p=64839"},"modified":"2024-06-15T12:00:02","modified_gmt":"2024-06-15T06:30:02","slug":"boeing-737-max-7-delays-imbalances-southwest-airlines-strategy","status":"publish","type":"post","link":"https:\/\/aviationa2z.com\/index.php\/2024\/06\/15\/boeing-737-max-7-delays-imbalances-southwest-airlines-strategy\/","title":{"rendered":"Boeing 737 MAX 7 Delays Imbalances Southwest Airlines Strategy | Exclusive"},"content":{"rendered":"\n

DALLAS-<\/strong> The World’s largest single aircraft type carrier, Southwest Airlines (WN)<\/a> seems imbalanced as Boeing 737 MAX 7<\/a> delays have forced the airline to change its strategy.<\/p>\n\n\n\n

The Texas-based carrier earlier placed a firm order for 288 737 MAX 7, 207 MAX 8, and 199 were options to go with -7 or -8. But it has recently converted some of its MAX 7 orders into MAX 8. Let’s see how this order swapping turning out for Southwest.<\/p>\n\n\n\n

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Photo: Boeing<\/figcaption><\/figure>\n\n\n\n

Southwest 737 MAX 7 Delays<\/h2>\n\n\n\n

As of March 31, 2024, the Dallas-based carrier had a total of 694 aircraft on order, encompassing firm orders and options. For 2024, the airline had planned for 85 deliveries, which included 27 737-7s and 58 737-8s. However, this number has significantly decreased due to internal issues at Boeing, which we are aware of.<\/p>\n\n\n\n

Will Horton<\/a>, the aviation analyst in his post explains this in detail. He posed the question, “Has Southwest lost its balance?”<\/p>\n\n\n\n

Delays in the MAX 7 deliveries have led Southwest to opt for MAX 8s <\/a>instead. The -800\/MAX 8 models now account for 61% of the airline’s capacity, a significant increase from 38% in 2018. However, the larger 737s face challenges in achieving high load factors and avoiding yield dilution in Southwest’s short-haul segments.<\/p>\n\n\n\n

\"Southwest
Photo: Cado Photo<\/figcaption><\/figure>\n\n\n\n

1. Challenges with Load Factor<\/h4>\n\n\n\n

Boeing 737 MAX 7 delays have prevented Southwest from maintaining an optimally sized fleet. The airline has been phasing out its older 737-700s, which were previously crucial, contributing 62% of ASMs in 2018. Due to ongoing MAX 7 certification delays, Southwest has been acquiring MAX 8s instead.<\/p>\n\n\n\n

Between 2018 and 2024, the roles of the -700 and -800\/MAX 8 have dramatically shifted. Now, the -800\/MAX 8 models account for 61% of ASMs, according to OAG <\/a><\/em>data.<\/p>\n\n\n\n

The -800\/MAX 8 aircraft have 32 more seats than the -700 (175 vs. 143). While the MAX 8 may have similar trip costs to the -700, this maintains rather than reduces the cost structure. Managing costs remains a significant challenge for Southwest.<\/p>\n\n\n\n

This shift to larger aircraft has also coincided with declines in load factors and yield weaknesses.<\/p>\n\n\n\n

\"Southwest
Photo: Will Horton<\/figcaption><\/figure>\n\n\n\n

2. Struggle on Some Routes<\/h4>\n\n\n\n

Phoenix (PHX)-San Diego (SAN):<\/strong> Southwest used to primarily operate -700s on this route. However, with the retirement of these aircraft and the absence of MAX 7s, Southwest has shifted to an almost even split between -700 and -800\/MAX 8 models.<\/p>\n\n\n\n

The -700 flights have maintained an 81% load factor. In contrast, the increased deployment of the -800\/MAX 8 has seen their load factor drop to 67%. On average, the -800\/MAX 8 flights carry 117 passengers, just one more than the average -700 flight.<\/p>\n\n\n\n

Several factors, such as yields, aircraft availability (given the short distance), and directional variances, remain unclear. Public data does not provide load details for specific flights.<\/p>\n\n\n\n

The low load factor for the -800\/MAX 8 in 2023 is particularly noteworthy, considering it outperformed the -700 in 2018. This past performance might have been due to strategic aircraft allocation and effective yield management, or perhaps the limited deployment of the -800\/MAX 8 in 2018 was a tactical decision.<\/p>\n\n\n\n

Baltimore (BWI)-Orlando (MCO): <\/strong> Southwest has maintained the same number of -700 frequencies when comparing July 2018 to July 2023. To expand the market, Southwest added more -800\/MAX 8 frequencies.<\/p>\n\n\n\n

The load factor on -700 flights dropped slightly from 87% in 2018 to 84% in 2023. However, the -800\/MAX 8 load factor fell significantly by 16 points, from 89% to 68%. On average, the -800\/MAX 8 flights carry 120 passengers, the same as the -700 flights.<\/p>\n\n\n\n

As with Phoenix<\/a>-San Diego, the -800\/MAX 8 outperformed the -700 when used less frequently, based on load factor. It appears that Southwest may not be ideally suited for such a large proportion of its capacity to be supplied by medium\/large narrowbodies.<\/p>\n\n\n\n

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Photo: By Tom\u00e1s Del Coro – https:\/\/www.flickr.com\/photos\/tomasdelcoro\/49898991303\/, CC BY-SA 2.0, https:\/\/commons.wikimedia.org\/w\/index.php?curid=103538454<\/figcaption><\/figure>\n\n\n\n

Bottom Line<\/h2>\n\n\n\n

Will finally concludes his insights and says, ‘Southwest is dealing with several challenges. While MAX 7 certification won’t solve everything, the deliveries of MAX 7 aircraft will assist Southwest in re-balancing its fleet. Currently, Southwest has more firm orders for the MAX 7 (288) than for the MAX 8 (207), though it retains the flexibility to interchange variants.’<\/p>\n\n\n\n

‘Even if activist investor Elliott doesn’t manage to implement a specific change, it can likely still benefit once MAX 7 deliveries increase and competition from ULCCs decreases,’ added Horton.<\/p>\n\n\n\n

Feature Image: Caden Henderson (@cado.photo)<\/a> \u2022 Ins<\/a>tagram photos and videos<\/a><\/p>\n\n\n\n

Join us on\u00a0Telegram Group<\/a>\u00a0for the Latest Aviation Updates. Subsequently, follow us on\u00a0Google News.<\/a><\/p>\n\n\n\n

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Southwest is Making New Changes to Its Boarding Process<\/a><\/blockquote>