Southwest Airlines is betting it won't need 140 737 jets for a while
Southwest Airlines will fly fewer than half of its 742 Boeing 737s on any given day through at least June as it responds to the decimation of travel demand by the coronavirus pandemic.
Of the roughly 390 parked jets, the Dallas-based carrier has placed some 140 in what it considers long-term storage, Southwest operations chief Michael Van de Ven said during an earnings call on Tuesday. These planes include 106 737-700s and -800s selected due to age or upcoming maintenance events, as well as its already grounded 34 737 MAX 8s.
Southwest is betting it will not need these stored aircraft anytime soon. The 106 737-700s and -800s represent nearly 15% of its operational fleet that, based on Van de Ven's comments, will take several days each to return to operation.
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U.S. airlines are navigating how much to cut from schedules and for how long amid unclear prospects. While some states have begun loosening stay-at-home restrictions aim to slow the spread of COVID-19, people remain wary of flying in a confined tube.
A recent International Air Transportation Association (IATA) survey found that as many as 40% of would-be travelers will wait at least six months after restrictions are lifted before getting back on an airplane.
Southwest CEO Gary Kelly cited this unease during the call Tuesday. He said the airline is exploring measures to allow some semblance of social distancing onboard flights, including possibly capping the number of seats it sells on any given flight at less than a plane's capacity.
“Right now the bias is towards shrinking the airline some, not radically," said Kelly in response to questions on Southwest's recovery plan.
Related: Southwest considers selling fewer seats to allow for social distancing
Other U.S. airlines have slashed more capacity and parked more planes than Southwest. United Airlines could fly as little as 10% of its schedule through June, while Delta Air Lines is in the midst of parking around 650 of its more than 1,300 aircraft. In addition, American Airlines and Delta will retire some fleets completely, including the former's Boeing 757s and 767s and the latter's McDonnell Douglas MD-88s and MD-90s.
Southwest is keeping its options open. The roughly 250 737s in short-term storage are being rotated into and out of regular service in order to keep them in operational condition and ready for the eventual recovery.
“The benefits of the short-term parking program is that the aircraft do remain part of the active fleet and it is more cost effective, in terms of storage costs, than the long-term storage program," said Nealon.
Related: Southwest may cancel your flight on short notice as it ‘tactically’ trims more capacity
One fleet that Southwest does not expect to return to the sky anytime soon is the MAX. Grounded since March 2019, the airline has now removed the type from schedules through the end of October. In addition, it has cut new deliveries by 75 aircraft to just 48 through the end of 2021.
Southwest anticipates deliveries of up to 27 MAX — the number of the planes Boeing has built and stored pending Federal Aviation Administration re-certification — by the end of 2020.
The airline is storing planes around the country. The 737-700s and -800s in long-term storage are parked at Indianapolis (IND), Paine Field (PAE) near Seattle, and Victorville, California (VCV). Short-term aircraft are parked at airports around its network with daily space.
Related: It may be years until passenger demand returns to 2019 levels for US airlines
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Why We Chose It
It's hard to find a card that competes with the mile-long list of benefits that come with the Amex Business Platinum. While it's certainly not the card for the average consumer, a business owner with tons of expenses -- especially related to travel -- will find this card incredibly valuable. This card is similar to the consumer version that Amex offers, but with more business-oriented perks around statement credits and earning rates that are a better fit for business owners.Pros
- An up to $100 credit for Global Entry or TSA PreCheck application fee every four to five years
- Up to $400 annual credit for eligible U.S. Dell purchases (enrollment required)
- Gold status at Marriott and Hilton hotels (enrollment required)
- Access to the Fine Hotels & Resorts program and Hotel Collection
- Extended warranty protection
- International Airline Program and Cruise Privileges Program
Cons
- Steep annual fee
- Difficulty meeting $15,000 welcome offer for smaller businesses
- Limited high-bonus categories outside of travel
- The Points Guy Exclusive Offer: Earn 150,000 Membership Rewards® points after you spend $15,000 on eligible purchases with the Business Platinum Card® within the first 3 months of Card Membership.
- Get 5X Membership Rewards® points on flights and prepaid hotels on amextravel.com, and 1X points for each dollar you spend on eligible purchases.
- Earn 1.5X points (that’s an extra half point per dollar) on eligible purchases at US construction material & hardware suppliers, electronic goods retailers and software & cloud system providers, and shipping providers, as well as on purchases of $5,000 or more everywhere else, on up to $2 million of these purchases per calendar year.
- Unlock over $1,000 in annual statement credits on a curation of business purchases, including select purchases made with Dell Technologies, Indeed, Adobe, and U.S. wireless service providers.
- $200 Airline Fee Credit: Get up to $200 in statement credits per calendar year for checked baggage fees, lounge day passes, and more at one selected airline.
- $189 CLEAR® Credit: Use your Card and get up to $189 back per year on your CLEAR® membership. CLEAR® is available at more than 50 U.S. airports and stadiums.
- The American Express Global Lounge Collection® can provide an escape at the airport. With more than 1,400 airport lounges across 140 countries and counting, you have more lounge location options than any other credit card on the market as of 9/2021.
- $695 Annual Fee.
- Terms Apply.