Citing improving market conditions and optimistic projections for a relatively robust Covid recovery, Southwest Airlines has exercised options on another 34 Boeing 737 Max 7s, bringing its firm order total for the smallest Max variant to 234, the company reported Tuesday in a Securities and Exchange Commission filing.
The company said it expects to take delivery of all 34 of the jets next year, bringing its 2022 Max 7 delivery total to 64. In late March Southwest placed a firm order for 100 Max 7s to replace its 737-700s after a lengthy evaluation that pitted the Boeing product against the Airbus A220-300.
In its filing, Southwest said it expects its second-quarter 2021 capacity to increase some 87 percent year-over-year and decrease by about 16 percent compared with the second quarter of 2019. The company also expects its August 2021 capacity to increase by 39 percent, year-over-year, and essentially match August 2019 levels.
Passenger demand and booking trends remain primarily leisure-oriented, said Southwest. Despite recent improvements in leisure demand, the company noted it remains cautious, that it continues to plan for different fleet and capacity scenarios, and that it will continue to monitor demand and booking trends and adjust capacity as needed.
The company's average core cash burn totaled about $2 million per day in May 2021. It now estimates its average cash burn, which excludes changes in working capital, to fall in the range of $1 million to $2 million per day in the second quarter of 2021, compared with its previous estimate in the range of $1 million to $3 million per day. Based on current booking trends and cost outlook, the company continues to expect to achieve breakeven average core cash flow, or better, this month, it added.
Southwest recently received the second disbursement of the $926 million of payroll support funding it secured under the American Rescue Plan Act of 2021, totaling the full $1.9 billion of expected payroll support. As of June 7, the company held cash and short-term investments of some $16.6 billion, well in excess of its outstanding debt, it concluded.