Boeing Order, 737 Retirements & Boeing Delivery News

Hey everyone, welcome back to your latest industry recap. Today is an absolutely action-packed episode focusing in on the US aviation industry. Don't want to waste any more of your time, so let's get right into it. Southwest has confirmed its intent to continue reducing its reliance on aging 737NG aircraft types for the remainder of this year and therefore the foreseeable future. Based on confirmation from the airline's executive vice president and CFO during a recent earnings call discussing the first quarter's result and published transcripts, the intent to continue reducing the 737NG reliance was clear. Southwest forecasts that by the end of 2025 it will remove up to 50 of these type of planes across its fleet as it makes way for the delivery of the more efficient and natural replacement MAX. The confirmation of 50 aircraft being shipped off also follows the news in late April which referred to the retirement of 14 aircraft from the 737 family that occurred in Q1. Those retirements align with the necessary capacity cuts that are taking into effect in the second half of this year. Southwest experiences lower demand than initially expected, but it's not isolated to just that. Renewal across the business has been hugely important. However, achieving those targets have proved more challenging than may be initially anticipated as supply chain woes have affected Boeing, with Southwest solely relying on the product that Boeing puts forward in the MAX to fuel its future fleet. When variants expected to be delivered remain either undelivered and or output rates remain capped and there are certification woes, your annual delivery forecasts are always going to be down year over year. However, with the retirement of beloved aircraft and the slow transition towards next generation MAX planes, it's not all doom and gloom. Southwest confirmed it would increase its commitment to the MAX away from fleet retirement and other struggles. As part of the latest confirmation arriving during the first quarter, the US carrier said that it had turned nine options for the smallest 737-7 into firm commitments. The confirmation is a vote of confidence in an aircraft type that remains uncertified with a timeline for approval now seemingly non-existent. Southwest has over 300 firm orders for the 737-7. The 737-7 model is the smallest in the series but is an optimal replacement for the carrier's existing 737NGs. Almost 200 options remain in the initial contracts that were signed. This can be firmed up for Southwest, however, its ability to get the planes it desires on time has become one of the more challenging occurrences we've seen of late. Delivery forecasting is expected to be wildly inaccurate across 2025 as Boeing cannot meet the figures that it may have expected and as a result, Southwest has had to slow renewal and growth just like many other airlines arguably felt more for the US carrier I'm talking about today because it relies on the one aircraft family in the 737. There are, don't get me wrong, obvious benefits to putting all your eggs in the one basket with strong commonality and efficiency, however, obstacles can definitely arise and given Boeing's last 5 years plus, well, Southwest has been front and center to certainly see the adversity that its highly regarded supplier has faced and it's also felt the effects of that too. Over to the next story and that centers around Boeing's deliveries. April of 2025 confirming that 45 planes were shipped off representing yet another solid period. 45 aircraft being shipped off also represents a significant jump from its performance during the same period one year prior when, believe it or not, just 24 planes were delivered. For Boeing, a lot has changed between then and now. Strong oversight is absolutely still present but during the month of April in 2024, there were much more problems with the 737 MAX and the company as a whole that were affecting its ability to produce planes on time. In March, Boeing shipped just 41 planes off so April shows another bit of an improvement and ultimately, while this could have been far more for it wasn't say the persistent threats of tariffs impacting its ability to operate smoothly, there are absolutely positives to take. In terms of April and reflecting, while Boeing did battle delivery rejections from China due to the threat of additional costs which has now been mended, the improvement across the last 12 months has undoubtedly been visible, however, even Boeing would argue that it is still insufficient with a major requirement to keep improving and increasing monthly production rates to match major airline customers backlog and requirements for delivery. The MAX led the way unsurprisingly despite its production caps, this aircraft played a big role in the monthly results with 29 of the 45 aircraft delivered for this popular single aisle family. Across the month, actually, United Airlines saw its reliance on the MAX increase tenfold with 8 of the series delivered, that equates to around 2 planes per week. Away from the 737 MAX, it was a strong month for deliveries for the Dreamliner where 8 planes were delivered and other types such as the 777F witnessed 4 aircraft deliveries. In terms of what is next, while all things considered, the many hurdles that Boeing faces on a daily basis, its performance could be regarded as a success, there is a lot more still to go but sometimes you have to take the small wins. They have avoided thus far any real major scandal with their commercial airplanes division and certainly no major groundbreaking problems that have grounded production for 5-6 months. And they have taken necessary steps to try and turn around their fortunes and as a result, for the remainder of 2025, it's important that they stick this way, continue taking more steps to build a long-term culture that values quality and safety from the top to the bottom of the business and create a more open dialogue between those on the floor and upper management. Only when the FAA sees considerable improvement does it say it'll ease its grip on the manufacturer, when that is remains to be seen, but for Boeing, resolving the restrictions will remain critical at some point. Boeing's finances have been poor for some time and debt has spiraled. This isn't a lie. Driven by an inability to deliver planes and produce them on time, this is one of the many things that is affecting them and puts them in this troubling situation. So, it's therefore imperative that restrictions are lifted sooner rather than later, but Boeing has to prove that it is able to have restrictions lift and still produce planes to the best of its ability. This is something it needs to work really hard on for the next, say, 6-7 months of this year and beyond. It can't lift its foot off the gas just because, say, it eventually gets the all clear to ramp up production. Over to the final story, that sits with a new order for Boeing, where the American plane maker says it has signed a deal with Avelis, a global aircraft laser base in Saudi Arabia and supports many international airlines with fleet requirements. The deal includes the purchase of up to 30 of your 737 MAX jets with the 737-8 specifically selected as very much your middle ground jet to try and support the leading aircraft laser's customer requirements. The deal includes in terms of the 30 planes a make-up of 20 firm units and the option is now available to the Saudi Arabian based company to activate 10 further units at a later date. They already own some 200 planes and manage relationships in lease agreements to 48 airlines that is now receiving key additional backing with the purchase of up to 30 more aircraft to Boeing so you'd imagine their scope will only rise. This is also their first direct original equipment manufacturer or OEM order as stated by the Lesser's chief executives as they try and find ways to support airlines growth for renewal and so much more. There is more to it than just this deal. Ultimately, while they aren't an airline, the commitment to new planes is an enhancement as part of a broader effort unveiled by the Kingdom. The Kingdom of Saudi Arabia is focusing really a lot more on the development of the aviation industry across the next 5 years. It's believed that if they can develop this, it'll be key in achieving their targets. Aircraft such as what is being ordered align with those commitments to develop new airlines such as Riyadh Air and grow existing ones. The ambition I speak of is to hit 330 million passengers and turn 150 million of those into visitors annually by the turn of the decade. Some believe this is out of reach but it doesn't stop the investments being made by the Kingdom not just to its aviation industry but also to tourism to try and make this a reality. Let me know your thoughts down below in the comments. Thanks for watching. Take care, be safe and I'll see you tomorrow.