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Southwest (LUV) Announces Deal for 100 Boeing 737 MAX Jets
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Southwest Airlines Co. (LUV - Free Report) reached an agreement with The Boeing Company (BA - Free Report) for an additional 100 737 MAX aircraft as it continues with its fleet modernization efforts and prepares to take advantage of the anticipated recovery in air-travel demand as more people get vaccinated. The agreement is also an indication of the airline’s confidence in the Boeing 737 MAX jets which were grounded for 20 months following two fatal air crashes.
Of the 100 firm orders for the MAX 7 aircraft, the company expects the first 30 to be delivered in 2022. As part of the deal, the airline has also converted 70 MAX 8 firm orders to MAX 7 and added 155 MAX options for either MAX 7 or MAX 8 aircraft, scheduled to be delivered from 2022 through 2029. With these order book additions and revisions, Southwest now has a total of 349 MAX firm orders (200 MAX 7 and 149 MAX 8) and 270 MAX options for MAX 7 or MAX 8 aircraft, to be delivered from 2021 through 2031.
Previously, the carrier’s order book consisted of 249 MAX firm orders (30 MAX 7 and 219 MAX 8) and 115 MAX options for MAX 7 or MAX 8 aircraft, to be delivered from 2021 through 2026. For the current year, the company continues to expect delivery of 28 MAX 8 aircraft (19 from Boeing and 9 from third-party lessors). Additionally, it expects to retire 17 737-700 aircraft in 2021, ending the year with a total of 729 aircraft (which includes 69 MAX 8 jets).
Southwest’s chief operating officer stated, “The MAX aircraft, with CFM International's LEAP-1B engines, enable exceptional operational efficiencies such as a 14 percent lower rate of fuel burn that reduces carbon emissions, quieter engines which benefit the communities we serve, and excellent dispatch reliability to support our on-time operations.”
The company expects more than half of the 737 MAX aircraft in its firm order book to replace a significant amount of the 462 737-700 aircraft (currently in its fleet) in the next 10-15 years as part of its fleet modernization and sustainability initiatives.
While Southwest carries a Zacks Rank #4 (Sell), Boeing carries a Zacks Rank #3 (Hold).
Shares of ArcBest and Saia have rallied more than 100% and 75% in the past six months, respectively.
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Southwest (LUV) Announces Deal for 100 Boeing 737 MAX Jets
Southwest Airlines Co. (LUV - Free Report) reached an agreement with The Boeing Company (BA - Free Report) for an additional 100 737 MAX aircraft as it continues with its fleet modernization efforts and prepares to take advantage of the anticipated recovery in air-travel demand as more people get vaccinated. The agreement is also an indication of the airline’s confidence in the Boeing 737 MAX jets which were grounded for 20 months following two fatal air crashes.
Of the 100 firm orders for the MAX 7 aircraft, the company expects the first 30 to be delivered in 2022. As part of the deal, the airline has also converted 70 MAX 8 firm orders to MAX 7 and added 155 MAX options for either MAX 7 or MAX 8 aircraft, scheduled to be delivered from 2022 through 2029. With these order book additions and revisions, Southwest now has a total of 349 MAX firm orders (200 MAX 7 and 149 MAX 8) and 270 MAX options for MAX 7 or MAX 8 aircraft, to be delivered from 2021 through 2031.
Previously, the carrier’s order book consisted of 249 MAX firm orders (30 MAX 7 and 219 MAX 8) and 115 MAX options for MAX 7 or MAX 8 aircraft, to be delivered from 2021 through 2026. For the current year, the company continues to expect delivery of 28 MAX 8 aircraft (19 from Boeing and 9 from third-party lessors). Additionally, it expects to retire 17 737-700 aircraft in 2021, ending the year with a total of 729 aircraft (which includes 69 MAX 8 jets).
Southwest Airlines Co. Price
Southwest Airlines Co. price | Southwest Airlines Co. Quote
Southwest’s chief operating officer stated, “The MAX aircraft, with CFM International's LEAP-1B engines, enable exceptional operational efficiencies such as a 14 percent lower rate of fuel burn that reduces carbon emissions, quieter engines which benefit the communities we serve, and excellent dispatch reliability to support our on-time operations.”
The company expects more than half of the 737 MAX aircraft in its firm order book to replace a significant amount of the 462 737-700 aircraft (currently in its fleet) in the next 10-15 years as part of its fleet modernization and sustainability initiatives.
While Southwest carries a Zacks Rank #4 (Sell), Boeing carries a Zacks Rank #3 (Hold).
Key Picks
Some better-ranked stocks in the broader Transportation sector are ArcBest Corp. (ARCB - Free Report) and Saia, Inc. (SAIA - Free Report) , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of ArcBest and Saia have rallied more than 100% and 75% in the past six months, respectively.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>