Buy used Planes

As Southwest' s chief of naval operations, Jon Stephens, calls it a "nice plan" to replace some of the oldest aircraft without investing heavily. Boeing is in the process of purchasing 83 used Boeing 737-700s from all over the globe, the biggest such transport in its more than four decades of existence.

South West and its US rivals - now flooded in hard currency after making last year's records gains - are searching developed economies for used planes as cheaper fuels make older, less effective planes more economic. This contradicts the legacy flows of transfer jets from US airlines to partners in newly industrialised economies and makes an already highly competitive Boeing Co. and Airbus Group SE markets more erratic.

As the commodity slowdown weakened the economy from Russia to Brazil, lower aviation fuels prices allowed US carriers to make nearly $19 billion last year. Up to two tens of used Airbus A319s are imported by United Continental Holdings Inc. from China. which has driven the company's business forward, is investigating the use of used automobiles 737 as its Brazil ally, Gol Linhas Aereas Inteligentes SA, is shrinking and restructuring its operation.

Even on the buyer's paradigm for modern jetliners, the airline companies did not reduce new orders. Since the used planes do not have to be overflown to cover the investment cost, they can be added on a selective basis to the route "so that the airline has more flexible timing and can enhance punctual performance," said George Dimitroff, Valuation Manager at Ascend Flightglobal Consultancy.

In the USA, older aircraft fell victim to four of the biggest airline bankruptcies in the last 15 years. In order to save money, they postponed orders and made do with aircraft they had previously exchanged for newer ones. Used aircraft imported into North America last year increased by 29 per cent to 198 aircraft, with Southwest taking the lead, followed by Allegiant Travel Co. and Delta, according to Ascend figures.

Reduced gas billings mean carriers get stuck on older singles instead of parked or scrapped. From the smallest Airbus and Boeing aircraft, only one Airbus19 and not 737-700s were dismantled for parts this year, up from 17 in 2015, according to Ascend. These trends are strengthening the worldwide aerospace markets for the world' top Boeing and Airbus aircraftmakers.

Already they are faced with revenue losses as carriers deal with exchange rate volatility and an amount of less than $50 per barrel per annum of crude petroleum, which has diminished the incentives to buy more fuel-efficient planes. As fewer singles have been withdrawn on Boneyard airliners, there is a danger of an overcrowded air liner as Boeing and Airbus increase the production of singles from 42 to around 60 per unit per month by the end of the century.

Boeing is not experiencing a drop in demands for its 737 work horse until now. Indeed, further orders are anticipated as around 700 small objects have already exceeded the 25-year milestone when aircraft are usually leftarking. However, the trade in used aircraft can distort the power of offer and request. In fact, the price of the decades-old Boeing 737-700s even increased last year as the southwest prevailed over the rest of the year.

Southwest has supplied 1,116 of the -700, the smallest plane of its present squadron, and Southwest will be flying almost half of them when its 2018 river is over. The Southwest is looking for more used planes, although it has ordered 200 of the 737 Max, modernized planes that will make their market début next year.

At the end of last year, the Dallas-based company also signed a contract with Boeing for 33 new 737-800s. Used aircraft were purchased by the company as early as the seventies, the tenth anniversary of the beginning of its operations. However, until about three years ago, the low-cost carriers never seriously considered making older aircraft a rival as well.

Stephens' crew saw a flood of deep-reduced Boeing 737-700s as a perfectly matched substitute for smaller Boeing 717s Southwest wanted to deliver to Delta. Pricing and rental conditions were so competitive that the southwest also opted to substitute the 737 Classic, older aircraft, which were susceptible to cracking and whose maintenance cost skyrocketed, with the used aircraft.

An argument with the pilots' unions was also a contributing factor given that the company speeded up its aircraft retirements by four years to 2017. AerCap Holdings NV, the biggest independant leasing company, was approached by the airlines to find aircraft to enter the aircraft leasing markets. When Transaero, Russia's second biggest air company at the time, went into trouble at the end of last year, AerCap flown the planes to Ireland and finally to the USA. After the conversion, they will look like any other southwest jets.