Southwest to be first operator of Boeing 737 MAX

Boeing Commercial Airplanes division painters (L to R) Larry Marshall, Greg Bracelen and David Grim stand under the airframe of a Southwest Airlines 737 jetliner that has been freshly painted at the airplane manufacturer's new 737-jetliner painting facility in Renton, Washington July 13, 2011.

Credit: Reuters/Anthony Bolante

CHICAGO | Tue Dec 13, 2011 10:14am EST

CHICAGO (Reuters) - Southwest Airlines (LUV.N), a loyal Boeing Co (BA.N) customer for 40 years, ordered 208 Boeing 737s worth $19 billion, including 150 of the upcoming 737 MAX.

In placing the MAX order, Southwest would be the first commercial operator for the upgraded, fuel-efficient narrowbody that is due to enter service in 2017.

The airline also became the first to complete an order for the new plane, although Boeing said it has commitments for hundreds more. Boeing said the deal marks its largest firm order ever in dollar value and the number of airplanes.

In addition to the MAX orders, Southwest said on Tuesday it will buy 58 737 Next Generation aircraft. The traditional discount carrier has a fleet of 699 aircraft, including 88 Boeing 717s acquired when it bought AirTran this year.

"Boeing keeps their exclusivity with Southwest and legitimizes the aircraft," said Alex Hamilton, managing director with EarlyBirdCapital. "The recovery continues to roar along."

Boeing said in November it had more than 600 order commitments from eight airlines for its 737 MAX, which will compete with the re-engined A320neo family from EADS' (EAD.PA) Airbus.

The planemaker said the MAX, powered by CFM International LEAP-1B engines, cuts fuel burn by an additional 10 percent to 12 percent over current single-aisle airplanes. CFM is a joint venture between General Electric Co (GE.N) and France's Safran (SAF.PA).

With the Southwest order, the 737 MAX has orders and commitments for more than 900 airplanes from 13 customers, Boeing said.

Boeing decided this summer to put a new fuel-efficient engine in its hot-selling 737 rather than mount a full redesign of the aircraft, which would have provided greater fuel savings but taken longer to bring to market.

The plan to re-engine was a defensive move to capture part of a giant order from AMR Corp's (AMR.N) American Airlines, the bankrupt U.S. airline.

AMR ordered 460 single-aisle jets worth up to $40 billion, but split the order between Boeing and Airbus, marking the end of an exclusive relationship with Boeing.

The deal included a provisional order for 100 revamped 737 MAX. That portion of the order could be jeopardized by AMR's bankruptcy.

Boeing on Tuesday also announced inaugural list prices for its 737 MAX aircraft. The 737 MAX 8 will sell for a catalogue price of $95.2 million, Boeing said on its website, while the larger 737 MAX 9 will sell for $101.7 million.

(Reporting by Kyle Peterson in Chicago, Karen Jacobs in Atlanta and Bijoy Koyitty in Bangalore; Editing by Derek Caney)

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Boeing logs big order from Southwest

n">(Reuters) - Boeing Co (BA.N) bagged its first firm order for the new 737 MAX fuel-efficient, narrowbody plane, as part of a $19 billion deal with Southwest Airlines (LUV.N) that the jet maker calls its largest order ever.

The order for 208 narrowbody planes includes 150 MAX aircraft and puts Southwest, a loyal Boeing customer, first in line to take delivery of the upcoming revamp of the best-selling 737, which will feature a new energy-efficient engine.

The order reflects robust demand for fuel-efficient planes as the airline industry struggles to rebound from a painful downturn and cope with volatile oil prices. The Southwest deal is also one of the last major aircraft orders up for grabs from U.S. carriers looking to replace aging models.

"It's been a very good year for orders, really driven by the re-engined platforms for Airbus and Boeing," said Peter Arment, an aerospace and defense analyst with Sterne, Agee & Leach. "We do expect that to continue in 2012."

He said Boeing would likely garner more orders for its 737 MAX from existing customers, and noted the company was currently competing with chief rival Airbus (EAD.PA) for an order from United Continental Holdings (UAL.N), the world's largest carrier.

Delta Air Lines (DAL.N) ordered 737-900ER 100 Next-Generation extended-range 737 planes in August, following a giant order in July from now-bankrupt American Airlines (AMR.N) for 460 single-aisle jets worth up to $40 billion, an order Boeing split with Airbus.

The MAX orders, combined with a strong existing backlog for other 737 models, will allow Boeing to raise production rates to record levels on one of its most profitable plane programs, Arment said.

"Longer term, it's going to help generate some additional earnings power for the company," Arment added.

MORE ORDERS EXPECTED

Boeing reported commitments for 948 MAX airplanes and said the figure could climb to 1,500 by the end of next year. It said the Southwest deal was its largest firm order ever in dollar value and the number of airplanes.

Private Indonesian carrier Lion Air last month placed an order for 230 planes, including 201 of the MAX that Boeing said at that time was its largest order, but those orders were not firm.

"It truly is Christmas come early for the Boeing Co," Jim Albaugh, Boeing's chief executive for commercial planes, told a press briefing held in Dallas to announce the Southwest order.

Later on Tuesday, Albaugh told the Reuters Manufacturing and Transportation Summit that "next year looks like it's going to be a very good year as well" for orders, assuming there is no economic meltdown.

In addition to the MAX airplanes, Southwest also said it will buy 58 737 Next-Generation aircraft. The traditional discount carrier has a fleet of 699 planes, including 88 Boeing 717s acquired when it bought AirTran this year.

Boeing said the MAX, which is competing with Airbus's re-engined A320neo family, cuts fuel burn by an additional 10 percent to 12 percent over current single-aisle airplanes. CFM International, a joint venture between General Electric Co (GE.N) and France's Safran (SAF.PA), is providing the MAX engines.

Boeing on Tuesday also announced inaugural list prices for its 737 MAX aircraft. The 737 MAX 8 will sell for a catalogue price of $95.2 million, Boeing said on its website, while the larger 737 MAX 9 will sell for $101.7 million.

Shares of Boeing closed flat at $70.90 in New York Stock Exchange trading.

(Reporting by Kyle Peterson in Chicago, Karen Jacobs in Atlanta and Bijoy Koyitty in Bangalore; Editing by Derek Caney, John Wallace, Gary Hill)

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