Southwest Airlines will freeze the size of its jet fleet through 2015, a one-year extension, as the largest discount carrier focuses on boosting its return on invested capital.
CEO Gary Kelly has said the airline intended to hold the number of planes – now about 680 – steady through 2014. He said in January that he wanted to “match and exceed” a 15 percent return that Southwest projects reaching this year after ending 2013 at 13.1 percent.
“In 2014 and 2015, the plans are for the fleet to be flat,” Chief Operating Officer Mike Van de Ven said in an interview at Southwest’s Dallas headquarters. “We should be in a situation after 2015 to grow the fleet if the economics and the business are right.”
Showing a higher return on invested capital is part of Southwest’s push to broaden its appeal to investors, along with stock buybacks and the longest-running dividend among major airlines. Delta Air Lines, the only other carrier in the Standard & Poor’s 500 Index, also has a 15 percent goal and matched that figure last year.
Keeping the fleet unchanged also raises the prospect of cutbacks in Southwest’s less profitable flights as it expands its network. By the end of 2015, Southwest has said, it would more than double service at DCA, add New York and DAL flights, and start international routes from HOU.