Southwest Airlines Senior VP Finance and CFO Laura Wright, at the Annual Dahlman Rose & Co Global Transportation Conference on 07-Sep-2011, stated Southwest Airlines has increased the number of B737-800s scheduled to enter the fleet next year to 33, all scheduled to replace the B737 classic, as part of an effort to continue reducing costs. Originally at 20 deliveries for 2012, the company has arranged for the lease of an additional five B737-800s which will be used out of its Dallas Love Field hub. The company expects to take delivery of 100 new -800s aircraft over the next few years, a large part of its cost-reduction strategy. Ms Wright also stated that due to fuel cost increases, which have resulted in declining profits for the carrier, it has become more aggressive in capacity cuts. Ms Wright also stated the carrier is anxious to enter the Atlanta market. It is planning to use Southwest metal to serve the 15 markets it originally announced in addition to the new points announced last week that AirTran did not serve – Phoenix and Las Vegas. Ms Wright elaborated on CEO Gary Kelly’s comments that Southwest would not retain AirTran’s B717s, stating it would be some time before they exited the fleet. AirTran brought 88 717s and 52 737s to the combined fleet. Ms Wright also explained the success of the company’s 2007 strategic plan, designed to increase revenues by USD1.5 billion, was driven by market-share increases rather than capacity growth. The additional revenues were offset, however, by rising energy costs. It is now in the midst of four follow-on initiatives including the acquisition of AirTran, its new FFP programme launched in Mar-2011, fleet replacement with the B737-800 and its new reservations system. Other initiatives in progress include additional revenue management techniques, in-flight connectivity, taking advantage of required navigation performance (RNP) and implementing an operations recovery/re-accommodation programme. Ms Wright added that merger synergies would yield USD400 million net by 2013, but it has forced the delay of its new reservations system, another initiative that will increase revenues exponentially.
Southwest Airlines accelerates fleet replacement
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The data indicate that total worldwide deliveries fell in 2016, the first such decline for six years, as a result of delays to new aircraft programmes. Boeing delivered more aircraft than Airbus for the fifth straight year, but its deliveries fell short of its 2015 level, while Airbus increased its numbers year-on-year. Total deliveries will likely rise again in 2017, but this may prove to be a peak year.
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The summer 2016 season came to an end on 29-Oct-2016. Adjusting for an extra week relative to the previous summer, it produced seat growth of 6% for capacity to/from/within Europe, matching the rate of growth in summer 2015, but higher than the 10-year average rate of 4% and higher than any other summer since 2010.
Current indications from data filed with OAG are that Europe will also experience accelerating capacity growth in the winter 2016/2017 season, which runs from 30-Oct-2016 to 25-Mar-2017. Adjusting for the season being shorter by one week relative to last winter, total seat growth in Europe is set to reach 7%, compared with 6% growth in winter 2015/2016 (and 6% growth in summer 2016). This is higher than the 10-year average rate for winter of 3% and the highest winter growth since 2007/2008.
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