Southwest Airlines Retired 36 Boeing 737-700s In 2020

Southwest Airlines started 2020 strong with a fleet of 747 Boeing 737 aircraft. While 34 MAX jets were parked, the airline still expected to fly a robust schedule and reach new heights. Unfortunately, 2020 had other plans, and Southwest had to retrench to crisis mode that saw the airline contract its fleet, not expand, with 36 Boeing 737-700 retirements.

Southwest’s Boeing 737-700 retirements

Southwest Airlines is down to 718 aircraft in its fleet. This compares to the 747 jets it flew heading into 2020. The carrier’s fleet as of December 31st stood at the following:

• 470 Boeing 737-700s
• 207 Boeing 737-800s
• 41 Boeing 737 MAX 8

At the start of 2020, the airline flew 506 Boeing 737-700s, so the new number reflects retirements of 36 737-700s.

Of the remaining 470 Boeing 737-700s, the airline owns 370 of them and has leased 100 of them. 17 of the 207 Boeing 737-800s are leased, the other 190 are owned. And, the MAX jets are pretty evenly split, with 21 owned and 20 leased.

Stemming some of the losses of the Boeing 737-700 jets were new Boeing 737 MAX 8 aircraft. In the fourth quarter, the airline received seven leased MAX jets.

Fleet changes in 2021

Southwest Airlines will be taking a total of 35 Boeing 737 MAX 8 jets in 2021, including 16 leased aircraft. The airline previously reported it planned to take the MAX 8s and simultaneously move forward with Boeing 737-700 retirements.

However, Southwest does not intend to grow its fleet in 2021, compared to the 747 planes it had heading into 2020. Essentially, this means that Southwest does not expect to operate in an environment in 2021 that would be similar to the environment it expected in 2020 before the crisis hit. In 2020, the airline was in an aircraft surplus position.

For Southwest Airlines, the 737 MAX 8s are bigger and better. The airline is hoping to put the jets in service to Hawaii, where the planes will offer better economics and performance than the existing 737 Next Generational planes flying from California to Hawaii.

Southwest moves closer to a hub strategy

Southwest Airlines has plenty of large bases across the United States. This includes Baltimore (BWI), Chicago (MDW), Houston (HOU), Dallas (DAL), Denver (DEN), Las Vegas (LAS), and Oakland (OAK), among many others. Much of the airline’s recent routes and planned new routes are expected to operate to and from these cities, giving Southwest the option to sell connections.

In its annual filing, Southwest Airlines stated that it had moved slightly away from a point-to-point network over a hub-and-spoke service. In 2019, 77% of the airline’s customers flew nonstop. This was down slightly to 72% in 2020, emphasizing some additional connecting passengers.

In 2019, the airline flew 720 nonstop city pairs. This went down to 667 nonstop city pairs in 2020, as the airline cut some more unprofitable routes and restructured its network.

The Boeing 737 MAX 8 will allow Southwest to do a multitude of things. The MAX 8s seat 175 passengers, whereas the 737-700s seat 143. While the MAX 8 will not be a perfect replacement for the Boeing 737-700, the airline will be upgauging some routes to a 737 MAX 8, which will offer more seats.

Expect those MAX 8 upgauged routes to include many routes from Southwest’s “hubs.” These “hubs” are places where the carrier can leverage connecting traffic to fill the 30-odd additional seats onboard the 737 MAX jets.

That is not to say that no nonstop point-to-point routes will receive upgauged services. However, until travel demand comes back in earnest, expect Southwest Airlines to place more MAX jets on routes with some connecting traffic.