Southwest (LUV) is reportedly close to a deal with Boeing (BA) for a potentially huge 737 Max order as the carrier looks to refresh its fleet. Boeing stock cleared a buy point.
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One source told Reuters late Wednesday that the deal could potentially include 130 firm orders plus significant options for 170 more. At list prices, 130 737 Max jets would be about $13 billion, though carriers typically get steep discounts for large deals.
However, another source said the firm orders could come in less than 100, according to Reuters.
The order would be for the Boeing 737 Max 7, which is a smallest variant of the narrowbody family of planes that received clearance late last year to return to service again.
It follows Boeing’s February report that showed more orders than cancellations for the first time since 2019, when the 737 Max was grounded following two fatal crashes.
Last month, the Air Current reported that Southwest officials were in early-stage talks with Boeing and CFM International, the jet-engine joint venture between General Electric (GE) and Europe’s Safran, for 300 planes.
A deal was Boeing’s to lose, the Air Current report said, as Southwest already flies the 737 exclusively and is the biggest Max customer.
A 737 Max order from Southwest would be a blow to Airbus (EADSY), which had hoped to sell its A220s to the discount airline. Raytheon Technologies‘ (RTX) Pratt & Whitney make the engines for the A220.
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Boeing Stock
Boeing stock rose 1.9% to 250.02 in premarket trading on the stock market today, a day after breaking out from a 244.18 buy point, according to MarketSmith chart analysis. GE fell 4% early Thursday after announcing plans for a 1-for-8 reverse stock split Wednesday, and top 737 Max supplier Spirit AeroSystems (SPR) rose 1.8%.
Boeing desperately needs new orders for its 737 Max jet after losing over 1,000 orders in the wake of two deadly crashes and the coronavirus pandemic.
Meanwhile, Southwest wants new jets to add to its all Boeing 737 fleet. The airline has been hinting about buying a non-Boeing plane, but the decimation of air travel by the coronavirus pandemic has changed its decision-making process.
During Southwest’s third-quarter call earnings in October, Chief Operating Officer Mike Van de Ven said the carrier will decide in the next year or so on whether to buy more Boeing 737 Max-7 jets or opt for Airbus A220s. Deliveries would start in 2025.
Follow Gillian Rich on Twitter for aviation news and more.
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