Southwest Airlines once again is accelerating retirement of
its Boeing 737 Classic fleet, a move that will slow capacity growth for the
carrier temporarily.
Earlier this year, Southwest bumped
up its projected retirement of the fleet from 2021 to mid-2018. Now, it has
moved that date up to 2017. That's earlier than the date when Southwest will put
the Boeing 737-8 Max into service, meaning that during the fourth quarter of
2017, Southwest will have about 50 fewer aircraft than previously planned, executive
vice president and CFO Tammy Romo said.
Uncertainty regarding U.S. Federal Aviation Administration
pilot-training requirements means Southwest will have to avoid having pilots
fly both types. The FAA's requirements likely will not be ready until next year.
"We've been negotiating to come up with a solution but have been unable to
come to an agreement," Romo said. "We intend to have capacity growth,
but this decision alone creates less capacity than previously planned."
President and CEO Gary Kelly said the decision is
"manageable but not preferable," noting that fleet projections beyond
that period remain the same.
Southwest's passenger revenue during the first quarter
increased 5.3 percent year over year to $4.4 billion. Traffic increased 9.9
percent, and capacity increased 9.2 percent, contributing to a load factor
increase of 0.4 percentage points to 80.5 percent.
Average passenger fare declined 2.7 percent to
$153.75. Southwest reported a first-quarter net income of $511 million, up from
$453 million in the first quarter of 2015. The increased revenue, combined with
lower fuel prices, drove that increase, according to Kelly.