|Quoting ScottB (Reply 60):|
Again, Southwest has firm orders and signed leases for 148 737-700's & -800's, along with 22 additional options through the end of 2016. The lease market for new and used NG 737's is also open to Southwest. So they could easily replace the 717 fleet within five years of SOC.
You have a good point there. Per the 10-Q (link below), they also have 22 more options + 5 more leased (in 2012)! (see That is a tremendous number of airframes. So I concede it could happen within 5 years.
I do suspect, as you note, that this is a 'carrot and stick' negotiating tactic. Considering how slow the negotiations are going, I'm not surprised.
Either way, I believe we can agree that the 717 won't be in WN
's fleet to 2024. Does it really matter if it is 2016 or 2019? While there are details, I think we can agree that by 2020 WN
will be 717 free.
While the details of the replacement will be interesting... It is a wait and see.
Some facts on WN
and the 717:
10-Q from Southwest: http://www.sec.gov/Archives/edgar/da...380/000009238011000070/form10q.htm
Fixed rate B717 aircraft notes payable
As of June 30, 2011, eight B717 aircraft were pledged as collateral for the obligations related to enhanced equipment trust certificates (EETCs). Principal and interest payments on the EETCs are due semiannually through April 2017.
Unless there are other obligations, expect those to be the first 8 to go...
On May 2, 2011, Standard & Poors (S&P) downgraded the Company’s senior unsecured debt rating from “BBB” to “BBB-“ primarily based on AirTran’s existing debt and leases, as well as risks associated with integration. S&P also revised the Company’s outlook to stable, based on expectations of a relatively consistent financial profile over the next two years.
In other words, WN
is looking to cut costs due to debt taken on acquiring FL
's model doesn't work well with a bond rating below BBB- (that is the lowest investment grade debt).
Considering the tone of that 10-Q and the 717, I suspect the type will be gone as quickly as WN
is able to arrange the lease terminations at reasonable fees.
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