Most commentary linking rising oil prices with suppression of an
economic recovery relies on vague generalizations. But Southwest
Airlines is blaming the upward march of fuel costs for a change in
expansion plans which could delay the deployment of hundreds of
additional planes, citing the need to reach a target of a 15
percent return on investment.
The Wall Street journal reports Southwest CEO Gary Kelly
(pictured), speaking in Chicago at an employee event, said of jet
fuel prices, "We prepared for $3.30, and now we're going to have to
be prepared for $3.50." He adds that fuel costs, with additional
uncertainty surrounding costs to merge recently-acquired AirTran,
may require "schedule adjustments."
Kelly adds plans remain on track to replace some older Boeing
737 variants with the 737-800 to increase capacity, and the first
of the more-efficient new 737 MAX aircraft will begin arriving in
2017, part of a recent $19 billion contract with the
There were bright spots in Kelly's outlook. He says the AirTran
acquisition will bring Southwest customers access to the world's
busiest airport, Hartsfield-Jackson International in Atlanta, and
add 22 cities to the list of those served, and an improvement in
annual revenue of $400-500 million.