Southwest Airlines (LUV -6.96%) is reportedly in talks with Boeing (BA 1.51%) and aircraft lessors to acquire as many as 30 737 MAX jets that no longer have their original buyers.
The 737 MAX has been grounded since March 2019 after a pair of fatal accidents, and during the grounding, Boeing has assembled more than 400 airframes that it has been unable to deliver. With the coronavirus pandemic causing demand for air travel to fall off, some of the customers that were eagerly awaiting delivery on the MAX heading into the year now no longer want the plane.
Southwest could add up to 30 already-completed 737 MAX aircraft under a deal with Boeing. Image source: Boeing.
Southwest is considering accepting so-called "white tail" planes (those that no longer have their original buyers) to replace a similar number of the 249 MAX planes it has on order, according to a Bloomberg report on Monday.
A deal could benefit both parties. Boeing has bled through more than $15 billion in cash in the first nine months of 2020, and needs to move those planes, which are in storage, as quickly as possible to rebuild its cash coffers. Upward of 25% of the planes Boeing has built but not yet delivered are white tails, according to Bloomberg.
Leasing company AerCap Holdings (AER 0.08%) for example said on Tuesday that it canceled orders for 24 MAX aircraft during the third quarter.
Boeing expects to have the 737 MAX recertified before year's end, but could need a year to work through its inventory.
Southwest, meanwhile, has one of the healthier balance sheets in the airline industry and is well positioned to capitalize on any discounts Boeing might offer to move the planes quickly.
