Dec. 1 (Bloomberg) -- Southwest Airlines Co., the world’s biggest low-fare carrier, will add a larger model of Boeing Co.’s 737 to its fleet to carry more passengers on high-demand routes and boost fuel efficiency.
The airline’s decision to switch some existing orders for 737-700s to 737-800s followed the approval today by pilots of contract changes letting them fly the bigger jet, the Dallas-based carrier said in a statement. Flight attendants last month approved similar contract revisions.
The larger plane will let Southwest increase seating capacity even as it holds its fleet of 737s steady, taking new aircraft only as replacements for older ones. The carrier will also be able to pack more passengers on high-demand routes and fly to Canada, Mexico and the Caribbean.
“The 737-800 is the sweet spot of Boeing’s narrow-body family,” said Douglas Runte, a managing director with Piper Jaffray & Co. in New York. “If you can fill up the plane, it is far more efficient for an airline to operate than the smaller 737-700.”
The -800 has 175 seats, 28 percent more than the -700, is about 10 percent more fuel efficient per seat and should trim costs to fly each seat a mile by about 15 percent. Southwest is the largest operator of Boeing 737s, the only type of aircraft it flies.
The carrier will complete talks with Boeing on changing an unspecified number of -700 orders, equipment options for the larger planes and seating configuration. The airline expects to take delivery of the first -800 in the first quarter of 2012.
“It is normal for customers to switch aircraft models,” said Vicki Ray, a spokeswoman for Chicago-based Boeing.
Southwest said July 29 that it had exercised options to buy 25 737-700s valued at $1.7 billion, based on list prices, with deliveries to start in 2011.
More than 75 percent of pilots voting approved changes to include the -800 in their contract, the Southwest Airlines Pilots’ Association said today. The revisions also provide for a September 2011 pay increase of either 2 percent, or an amount linked to Southwest’s profitability, whichever is greater; and a profitability-based raise in September 2012, as well as a one-year extension of the agreement to 2012.
Changes approved earlier by the Transport Workers Union provide for one additional flight attendant on the -800s and a contract extension, a profitability-based raise and company-paid training.
Southwest will divert from its long-held strategy of flying only 737s, the world’s most widely flown jetliner, when it acquires AirTran Holdings Inc. and adds that carrier’s Boeing 717s. Southwest agreed in September to buy AirTran for $1.4 billion in cash and stock.
Southwest rose 10 cents to $13.42 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have gained 17 percent this year.
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