Southwest Airlines has exercised 40 Boeing 737 MAX 8 options while deferring 23 737 MAX 7 deliveries, a fleet adjustment the Dallas-based carrier said was driven by the tax bill passed in late December by the US Congress.

 

The tax legislation, signed into law by US President Donald Trump, lowers the US corporate tax rate to 21%. The 40 737 MAX 8s firmed by Southwest are valued at $4.5 billion at list prices.

 

Southwest said it will receive 15 of the 40 aircraft in 2019 and the remaining 25 will be delivered in 2020. The deferrals will push 23 737 MAX 7 firm orders, previously scheduled to be delivered from 2019 through 2021, to 2023 (12 deliveries) and 2024 (11 deliveries).

 

“We applaud Congress and the president for taking this action to pass legislation, which will result in meaningful corporate income tax reform for the transportation sector in general, and for Southwest Airlines in particular,” Southwest chairman and CEO Gary Kelly said in a statement. One use of the additional capital Southwest expects from the tax rate change is ordering more MAX aircraft, Kelly said.

 

The airline’s 737 MAX 8s are configured with 175, 32-inch pitch seats in a single-class layout. The exercised options bring its total orders for MAX aircraft to 240. It placed its first 737 MAX 8s into service in the 2017 fourth quarter.

Aaron Karp aaron.karp@penton.com