Southwest press conference on 737 MAX order

Southwest Airlines held a web press conference (with written question submissions the staff can screen in advance–bad idea) on its new 737 MAX order. Here are highlights:

Gary Kelly, CEO

  • Only four 737 MAX delivered in 2017. Just 15 the following year. (From press release.)
  • Christmas came early to Southwest. [Last time Kelly said that was when he proposed moving from Sea-Tac to Boeing Field in Seattle. Got his head handed to him in the local opposition. Editor.]
  • We have seen tremendous advances with technology.
  • COO Mike Van der Ven led effort.
  • This is coming at just the right time. One of the main challenges we face are high fuel costs. We are very much in need of new technology to reduce the fuel burn and reduce environmental impact.
  • This supports our financial strategy.
  • Commonality major point.

Jim Albaugh, CEO of BCA.

  • [Albaugh looks a lot happier at this press conference than he did at the American Airlines one.]
  • Southwest is a special customer and we have a special relationship.
  • This is the first definitive agreement we signed. Southwest will get airplane #1 when it rolls off the line in Renton.
  • [With Southwest getting only 4 airplanes in 2017, this suggests a late 2017 EIS.–Editor]
  • 948 commitments now, projects 1,400-1,500 by the end of next year.
  • I don’t have the real thing but I have a model for you and a video.
  • [Video shows MAX will winglets, not the oft-speculated raked wingtips.]
  • This is largest order in Boeing’s history.

Kevin McAllister, VP Sales and Marketing for GE, representing CFM.

  • Southwest formally launches the LEAP-1B.

Mike Van der Ven, COO.

  • This allows us to accelerate the retirement of older airplanes.
  • Have 150 options to expand as well.
  • Our choice guarantees WN a single fleet type well into the next decade.
  • 16-18% fuel burn improvement over 737 Classics.
  • We’ve been in conversations with Boeing for several years.
  • Efficiency improvements allow up to improve without complexity.
  • Compared with A320neo and both did the job but 737 MAX was our choice.
  • Cost is $1.2bn for all outstanding orders (including those existing before today). Per year.
  • Airplanes still being defined.
  • 717s in leases 2017-2020+ and will work to see what the alternatives are but will operate through lease terms if we have to.
  • Primary factors of fleet commonality and gauge of 737-8 (more seats), lighter airplane vs A320.
  • We like the GTF technology but this comes as a package and CFM has millions of flight hours behind it. GE and CFM have been very good in past in delivering products on time and meeting specifications.

Brian Hirshman, SVP Technology, WN

  • We did extensive analysis vs A320neo and felt 737 MAX better suited.
  • Plane works better at Chicago Midway Airport, among other issues.
  • MAX would have to fly the same mission as NG and are satisfied it would do that.
  • We wanted as much commonality as we can.

John Hamilton, Boeing 737 chief engineer.

  • The airplane is fairly well defined. Will reach final configuration in 2013. It’s well enough known that WN and Boeing had confidence to go forward at this time.
  • MAX will have capability to have increased payload-range vs NG.
  • Airport performance was important, especially at key airports.
  • We will make sure we get Southwest what it wants.
  • We both would have liked a new airplane, but when you look at lessons learned [from 787] it was more challenging to bring to market in the timeframe customers wanted.

Chaker Chahrour, EVP CFM

  • Core is optimized for MAX for best overall fuel burn.
  • We believe we have much more credible technology than GTF. We have tremendous amount of confidence in our technology and at the end of the day it will be the most economical.

41 Comments on “Southwest press conference on 737 MAX order

  1. WN did extensive analysis of the NEO vs. the MAX, then ordered 150 B-737MAX, 150 MAX options, and 58 NGs.

    B-737MAX has 948 committments and firm orders, at least another 150 options, and Boeing thinks they could have 1400-1500 (or more?) by the end of 2012.

  2. Sorry for raining on this parade of orders here, buuuut……

    Boeing has managed to get an order from the one airline that is most associated with Boeing. I mean Southwest has been pushing them for the Max for how long and has all but announced they were buying Boeing.

    This was an order that was all but guaranteed for Boeing and look how long it took them to get it lined up.

    The question, as it always will be, and will never be accurately answered here, is what kind of a price will Southwest have to pay?
    Other questions are, “When do they get their next order?” and “From whom?”.

      • Thanks Scott. I did catch that but did not read the Airinsight report. I do not know how accurate this number is (as with the prices for the original 787 sales reported by Flightblogger, as with the 737/NEO prices for AA and so on) and was under the impression, that despite such analysis, the exact numbers are closely held pieces of information.

  3. Aero Ninja, it has been reported by AirInsight that WN got a 48% discount on the total order, which includes 58 NGs.

  4. Typo or missunderstanding:
    Mike Van der Ven, COO
    * Cost is $1.2bn for all outstanding orders (including those existing before today).

    going by the WP page current outstanding orders is 283 ( 113 -700, 20 -800, 150 MAX )
    $1200m / 283 ~= 4.24m/per frame.

    $12.0b would be more of a realistic number ?

      • Hmm, a point … A Point for X-Max!

        FlightGlobal says:
        list price of
        $77.7 million for the 737 Max -7,
        $95.2 million for the -8 and
        $101.7 million for the -9 variant.

        Then : 42 is a nice number anyway.

      • Thanks.
        .. over 8..10 years then. That would match CBL’s link ( air insight ) .


    • From

      Southwest Airlines has just placed the largest aircraft order in Boeing history, ordering 58 737NG aircraft and becoming the launch customer for the 737Max, with 150 firm orders.

      The combined order is valued at more than $19 billion at list prices, although our sources indicate that pricing is closer to $10 billion given the substantial discount provide to Southwest, which will remain the largest single customer for the 737 and remains an all-Boeing customer.

  5. Pingback: Flight: Southwest becomes 737 Max launch customer with 150-strong firm order | G2 Solutions News Analysis

  6. Pingback: Southwest orders 737 MAX - FlyerTalk Forums

  7. As a Southwest passenger, I would like to see the MAX 7 stretched 4 to 6 frames. I think JetBlue’s product is the future with a mix of economy and premium economy seating. A longer MAX 7 would allow Southwest to seat 150 with several added rows of premium economy available to the early boarders.

    United could regain my business if they bought the MAX 8 and configured it for 150 seats. Three rows of first, 11 of economy plus and 12 of economy. I’m not sure why they charge so much for economy plus. If they only charged 20% more for a 36″ pitch, that is the equivalent of a 30″ seat, minus the 20% pasenger and bag load on the aircraft. Until then I’ll stick with Southwest, rational pricing and the simplicity of navigation in their bag and boarding system.

    On the flip side, will Airbus make a direct competitor at the size of the 738?

  8. “Plane works better at Chicago Midway Airport, among other issues”

    Is this the old grandfathering in play again?

  9. Has there been any better news, but this about the 737MAX from Boeing lately?
    “Jim Albaugh, CEO of BCA. 948 commitments now, projects 1,400-1,500 by
    the end of next year.”
    Maybe the record number of 777 sales, but between the two, I feel a lot more
    confident about BCA’s future, than I have for a long time!

    With a bit of luck, MAX sales will surpass the number of NEO sales next year
    and cause Airbus CCO John Leahey, to eat some humble pie for a change!

  10. The order is no suprise to us or anyone in the industry, EADS had a snowballs chance in hell of landing this one & Boeing were falling over themselves to get a confirmed order. What is a suprise is just how long this launch order took to come to fruition, read into that what you will.

    The tribulations of being a launch operator are always a concern, but SW know the risk & just as EADS does Boeing will have sweetened the SW launch contract to cover all potential eventualities..

    Good to have a competitor that finally has an entry in its order book.

    • That’s what most people thought about Airbus snagging an order from AA, much less the majority of that order.

      WN is well awere of what the problems and benefits are of being a launch customer. They have launched 3 different B-737 versions already. Launching one or two versions of the MAX adds to their successful list.

    • Good question. AirT started taking deliveries in 2003, but the last one was in 6/09. None since, with 51 remaining.

    • Typically in non-Bankruptcy mergers all debts and obligations are taken up by the merged entity. So, generally speaking, those orders become Southwest orders. Of course, it all depends on the particulars of the merger contract.

  11. Interesting: MAX is 18% better than Classic in Fuel Burn. Would have expected more, given that B737 Classics use -3 engine and have quite crappy wing (for today’s standard).

    I would expect a few customers for the MAX.
    You cannot beat the economics of an installed fleet. MAX has 80-90% commonality with NG (except engines), so switching would require a competitor being much better (~10% fuel burn).

    Less attractive for the majority of North American passengers, that they will continue to travel in 1950ies standard cross section well into the late 2020ies.

    • The 737-300 deosn’t only have a “quite crappy wing (for today’s standard)” it is also much smaller and lighter..

      • same length ( 102ft ),
        weight +10klbs/+15%,
        wingspan +18ft+20%
        Boeings plane to Airbus dimensioning 😉

  12. Sorry, I meant “… a few MORE customers …”.
    and possibly quite soon, as slots start to fill up.

    CFM/GE’s talk about having better technology sounds funny, given they cannot bring the first aircraft into service before 2017, while the GTF already has scored air miles.
    What does aeroturbopower think about this?

  13. Transfer the reliability??? With the amount of new tech they bring, that is something that needs to be proven, it is not a given.

    Remember that the LEAP runs hotter than the PW1133G, and higher temps have historically been associated with shorter part life (in cycle terms) and thus shorter maint intervals and higher spare part cost.

    Sure, CFM will introduce new mtrl tech to compensate some or all of that, but such tech is never cheap…

    And what prevents PW from doing similar things? if not from the start, as upgrades and/or retrofits.

    CFM cannot lower their temp as a retrofit as their thermodynamic cycle depends on it…

  14. We can argue and speculate about the relative performances of the planes and the engines, but isn’t it really a lot of wasted breath? Isn’t the key point here that the mkt for these planes is so huge that no one OEM can come close to serving it, so there is plenty of room for everyone.

    • Correct in every respect, the avalanche of orders the NEO received post launch likely means some carriers ordering now will be doing so based on delivery date & not preferred first choice. At this juncture it seems that carriers opting for MAX are presented with more speculative operational data than the NEO presents, thereby accepting any long term operationally risk this may pose.

      EADS’s lack of early delivery slots presents Boeing with a genuine opportunity to recover it’s diminishing single aisle market.

      • “EADS’s lack of early delivery slots presents Boeing with a genuine opportunity to recover it’s diminishing single aisle market.”

        Please come up with some proof on your comment.

  15. @ Schorsch RE # 21:

    It’s probably not possible with the information provided to fully evaluate the “18% better than classic” comment, but we can take a few educated guesses:

    If we assume Mr. Van der Ven meant block fuel per seat, then we can guess what models he was referring to. My guess is 737-300CL vs 737-7 MAX. If that was the case, the 16% to 18% aligns pretty closely with the numbers Boeing has shared publicly regarding the MAX:

    Block fuel per seat:
    737-300 @ 137 seats = Base
    737-700 @ 137 seats = -6% to -9% (varies a bit depending on stage length)
    737-7 @137 seats = -10% to -12% (Boeing has consistently quoted this range)

    Given the above, block fuel per seat for the 737-7 MAX should be -16% to -21% relative to the 737-300 Classic. This seems to be the most likely comparison he would be making, since it is the aircraft and configuration SWA operates, and using the 737-7 MAX (although they are unlikely to operate any -7s) seems to be the reasonable comparison for SWA to make in order to best understand the performance improvement offered by the MAX. -16% to -18% is solidly within the fuel burn reduction range this comparison gives us.

    If you wanted to argue SWA was referring to the 737-8 MAX, then I agree, the number cannot make sense. The 737-800 has ~20% lower block fuel per seat compared to the 737-300 (175 seats & 137 seats, respectively). Half of this is just from the size difference of the aircraft. The 737-8 should easily beat the 737-300 by at least 30%, so it is doubtful this is what he was referring to.

    One other possible explanation is he was quoting a TSFC number from CFM and the comparison is actually between the CFM56-3 to the LEAP-1B. I’d expect that number to be not far off from -18%.

    • My comparison wasn’t as clear as it should have been. Here it is cleaned up a bit:

      Block fuel per seat:
      737-300 @ 137 seats = Base
      737-700 @ 137 seats = -6% to -9% (varies a bit depending on stage length)

      737-700 @ 137 seats = Base
      737-7 @137 seats = -10% to -12% (Boeing has consistently quoted this range)

      The 737-7’s 10% to 12% reduction compared to the 737-700, as quoted by Boeing is 10% to 12% of a smaller number than the base in the comparison of the 737-300 vs 737-700. That will shift the cum of these percentages lower than the -16% to -21% quoted above, making the total reduction from 737-300 to 737-7 closer to -14% to -19%. As mentioned in my first post, there’s a lot of circumstantial and mathematical evidence this is the comparison Mr. Van der Ven was making.

  16. Congrats to Boeing – seems like they’re ending this year on a high note.
    The Boeing workers and Engineers were due some good news IMHO

  17. Right now Southwest has 360 737-700. If they fill the remaining NG slots with 200 737-800, that is still about a 2:1 ratio of -700:-800.

    Will there be five years of overlap when Renton is producing NGs and MAX(pl)? Seems like the cost of fuel would force a quicker switch to the better engine.

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