How badly does Southwest need the MAX 7?

The absence of the MAX 10 is being paid a lot of attention as the A321neo continues to experience growing demand. We looked through the data (through September 2023) to see what we might discern. The popularity of the MoM suggests that US airlines are upsizing. The chart shows the steady rise in load factor on single-aisle MoM aircraft among US airlines. The table below lists the average number of passengers on these aircraft. Tracking the 757 and A321 shows how these two are virtually equal. Then came the A321neo, and it leaped ahead. [caption id="attachment_82483" align="aligncenter" width="580"] AirInsight[/caption] So, was upsizing systemwide? No, Southwest upsized from the 737-700 to the -800 with interesting results. The chart is the same as above but focuses only on Southwest. The merger with AirTran brought some models that were quickly sold off. [caption id="attachment_82484" align="aligncenter" width="580"] AirInsight[/caption] There are some points to emphasize: The last row of the data table lists the average number of passengers; the highest point was 2023. 129 passengers is way below the 175 seating on this airline's MAX 8 or -800. These larger models present a challenge, even with rising loads. The following charts list the number of flights and percentage of ASMs for the airline by aircraft model. [caption id="attachment_82487" align="aligncenter" width="580"] AirInsight[/caption] Southwest has seen a steady rise in flights from its larger aircraft models. Even so, the -700 still accounts for over half the operations. The MAX 8 impact mushroomed in 2023; 21% of flights generated 27% of ASMs. But for 2023, the typical Southwest flight carried 129 passengers, making -800, and MAX 8 fights operate at 74% load factor. The systemwide load factor was 81%. The -700s were the most efficient models the airline operated. It is replacing these models that have become urgent for Southwest. The -700 Replacement Conundrum [caption id="attachment_82488" align="alignright" width="262"] AirInsight[/caption] To further illustrate how Southwest has tried offsetting the lack of the MAX 7 without buying new -700s, take a look at the number of -700 derivatives they operate. Southwest acquired the world's largest MAX 8 fleet, taking delivery of one every four days last year. The Boeing code for a Southwest aircraft is H4 in the derivative nomenclature. So, a -7H4 is a Southwest original delivery of a 737-700. a -8H4 is a Southwest 737-800. The number of 737-700 derivatives Southwest bought on the second-hand market is eye-popping. There are 15 model types other airlines have discarded, and Southwest bought them. This signals how badly the airline needs this size in its fleet. Removing the MAX 7 from its 2024 network plans is a blow. Typically, a Southwest 737 does six flights per day. That is a lot of cycles; as the table shows, several of these models are already aging. The older models need reinforcing as well as more MRO investment. Who is going to bear that cost? Boeing or the airline? This is something we have not heard a peep about. The data suggests that Southwest's fleet requirements are severely impacted by the absence of the MAX 7; arguably far more serious than what is being spoken about. When will Wall Street start asking questions that specifically address: The cost impact on the airline of keeping aged -700s Who is paying for the MRO on them? Is Boeing compensating Southwest for the MAX 7 delays?

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