One of the broadest provisions on the Republican-backed tax bill working its way through congress this week is a massive tax cut for corporations. And if the legislation is approved, Dallas-based Southwest Airlines may put some major fleet upgrades in the pipeline.
According to Bloomberg, Gary Kelly, the CEO of Southwest Airlines suggested that the tax cut "puts us in a position to think about growing faster" and "gives us an opportunity to begin to modernize our fleet."
Southwest's fleet is uniquely made entirely up of variants of the Boeing 737, which makes maintenance easier for the carrier but which also limits the routes that it can fly. When the carrier launched routes to Hawaii earlier this year, for example, it had to get special over-water certification on its long haul 737 MAX 8 fleet before starting service.
The airline currently operates around 700 variants of the 737 while around 200 more are on order. Upgrades to the airline's fleet could range from replacing its aging 737-700 fleet -- which it started receiving in 1997 -- to adding more long-haul capable aircraft like the 737 MAX 8, which could service more long-haul destinations. The carrier could also expand outside of its 737 wheelhouse.
Southwest could use also use the proceeds from the tax cuts to grow. Right now, the carrier has the fourth largest fleet in the nation behind American, Delta and United. American, by contrast, has almost 1,800 aircraft in its fleet.
Regardless of the airline's trajectory, Southwest's plans answer the question for many of whether corporations will use the tax windfall to hoard cash or actually invest in growth. Earlier this month, CNBC reported that many CEOs have few plans to expand hiring, despite the "cheery outlook" on the economy. While Southwest's situation and plans may be unique, it reflects at least one company that may be investing in product and passing on a better experience to consumers.
