Southwest Airlines (NYSE:LUV) on Monday confirmed that it is in talks with Boeing (NYSE:BA) about acquiring planes that don't currently have buyers, but said the planes would replace other orders and not be for fleet expansion.
Boeing's 737 MAX is expected to be cleared to fly again soon, more than a year after being grounded due to safety concerns, and the aerospace manufacturer is scrambling to find takers for the more than 400 planes it has built but has been unable to deliver during the grounding. The company's task has been made harder by the coronavirus pandemic, which has stifled demand for air travel and caused airlines to rethink growth plans.
Southwest CEO Gary Kelly on Monday confirmed reports that the airline is in discussions to potentially acquire some of those so-called "white tail" planes (those that no longer have their original buyers), but stressed those airframes would be replacements for, and not additions to, the 249 MAX planes it has on order.
"No one should think Southwest is gonna get 50 more airplanes than what they were planning on in terms of incrementing the fleet," Kelly said during an aviation webinar, as quoted by Reuters. "That'd be crazy. We're not thinking about that at all."
Even if Southwest isn't planning on aggressively expanding its fleet during a pandemic, the airline is trying to take advantage of its relatively healthy balance sheet to take share from others.
It is adding four cities to its route network in 2020 and expects to add another six in 2021, according to The Wall Street Journal, with the growth focused on markets currently dominated by other large airlines, including United Airlines Holdings (NASDAQ:UAL), American Airlines Group (NASDAQ:AAL), and Delta Air Lines (NYSE:DAL).
The expansion is not without risk. Despite its reputation as a discounter, Southwest has a cost structure that is higher than those of Spirit Airlines and Allegiant Travel. But the promise of growth could also help Southwest ease tensions with unions that are balking at the talk of potential pandemic-related furloughs headed into 2021.
Jon Weaks, a Southwest captain and head of the airline's pilots' union, told the Journal the expansion plan was "predatory and opportunistic -- which we like."