Southwest to explore selling old and new 737s to create cash flow

Southwest Airlines is considering selling some of its older Boeing 737-800s and newer 737 Max jets, in addition to executing aircraft sale-leaseback deals, to boost its weakened financial position. CE Bob Jordan discussed Southwest’s plans to leverage its current and incoming narrowbody Boeing jets during its investor day on 26 September, as the company unveiled a sweeping strategic overhaul aimed at recapturing its lost form. “We have a unique opportunity to capture value and earnings on excess aircraft we do not need with our moderate growth plan,” Jordan says. ”With that in mind, we are pursuing direct sales of [737]-800 aircraft. We are also looking at sale-leaseback where we can be opportunistic.” Demand for narrowbody jets is strong thanks to Boeing’s ongoing delivery delays – compounded by what increasingly looks like a protracted machinists’ strike – and the recall of hundreds of Pratt & Whitney’s geared turbofan (GTF) engines, which power Airbus A320neo and A220 aircraft. Those constraints are causing slower-than-anticipated growth for airlines around the world. “So, the secondary market for used aircraft is going to stay strong for literally years to come,” Jordan says. “The implication is that we have a lot of flexibility [for] sale-leasebacks on the -800s and the new Maxes.”’<br/>Sale-leaseback transactions involve an airline selling its aircraft to a lessor and leasing them back as a means of generating cash. It is a strategy often employed by ultra-low-cost carrier Frontier Airlines. ”Southwest needing to borrow from Frontier’s playbook is pretty sad commentary,” William Swelbar of the Swelbar-Zhong Consultancy opines on social media. He and other airline analysts believe it would be a mistake for Southwest’s recovery plan to rely too heavily on such financial manoeuvres. CFO Tammy Romo says leveraging the value of Southwest’s all-737 fleet is not a “core” part of its revamp. <br/>