SOUTHWEST ORDERS 25 BOEING 737S AIRLINE'S CHAIRMAN RESIGNS AS PART OF SUCCESSION PLAN

Southwest Airlines, which announced Thursday that its legendary chairman and co-founder, Herb Kelleher, will resign in May, has ordered another 25 Boeing 737s. The order is worth about $1.7 billion at the list price of the 737-700. Southwest...


Southwest Airlines, which announced Thursday that its legendary chairman and co-founder, Herb Kelleher, will resign in May, has ordered another 25 Boeing 737s.

The order is worth about $1.7 billion at the list price of the 737-700. Southwest said it exercised options to buy the jets, which will be delivered starting in 2013.

The Boeing Co. said the Southwest jets were among 36 new orders that it won in the past week, raising its total for the year to 616 net orders. Other new orders included six 787s and two 777s. Boeing did not identify the customers for those planes.

Airbus still leads the annual order battle. As of the end of June, Airbus had 680 firm orders. Boeing beat Airbus in orders last year for the first time since 2000. Airbus had trailed Boeing by a wide margin for most of the first half of this year, but then announced more than 400 orders at last month's Paris Air Show.

Boeing's 737 has been its best-selling jet this year, just as the single-aisle A320 family has been the top seller for Airbus. With the latest Southwest order, Boeing has 267 net orders for the 737 in 2007. Not far behind is the 787 Dreamliner, with 235 firm orders. The 787 is being readied for its first flight in September.

Southwest is the world's largest operator of the 737. It has more than 500 in its fleet. But the airline is slowing the pace of its growth - and delivery of more 737s - to help earnings. This week, Southwest reported that profits fell 17 percent in the second quarter. The Dallas-based airline said it will take from five to 10 fewer 737s annually from 2009 through 2011.

Meanwhile, Kelleher, 76, will remain an employee of the airline for five years after leaving the chairman post. He resigned as chief executive of Southwest in 2001.

Kelleher helped start Southwest in 1971, when it served only Texas cities. It would become an industry model for low-cost airlines around the world. Kelleher negotiated the new airline's first jetliner deal with Boeing - for three white-tail 737-200s that were purchased on a conditional sales agreement. Boeing financed 90 percent of Southwest's costs. A white-tail plane is one that has been built but has no customer.

With Kelleher at the helm, Southwest was the launch customer for the 737-300, 737-500 and finally the next generation 737-700. The first 737-700 was delivered to Southwest in December 1997.

In addition to Kelleher, another Southwest executive will resign next year. Colleen Barrett, 62, will step down as president in July, the airline said. Like Kelleher she will remain an employee of the airline for five years. Both will work full-time in the company's Dallas headquarters, Southwest said.

Southwest also announced that it has extended the contract of Chief Executive Gary Kelly into 2011.

Kelleher said he and Barrett were not pushed out, according to a report by The Associated Press. Kelleher said the departures were part of a succession plan that has been in place since he resigned as CEO in 2001.

Kelleher said there will be little impact on the airline when he resigns as chairman.

"I have not been the face of Southwest Airlines for the last six years," he was quoted as saying by The AP. "Colleen and Gary have, and they've been most successful at that."

P-I aerospace reporter James Wallace can be reached at 206-448-8040 or jameswallace@seattlepi.com Read his Aerospace blog at blog.seattlepi.com/aerospace.

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