Southwest to grow Q2 capacity by 3%

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Southwest Airlines expects to grow capacity in the second quarter by about 3%, as the airline maintains a forecast of 2% capacity growth for the full year in 2013.

The carrier will grow capacity by about 1% in the third quarter, says its chief financial officer Tammy Romo today in an earnings call.

Southwest's executives say April passenger unit revenues are expected to fall as revenue weakness continues, but bookings for May and June appear solid. Lower than expected fuel prices will help offset the April weakness, says Romo.

The airline has tweaked its delivery plan for 2013, and will take delivery of 18 737-800s this year instead of the 20 it had expected. Southwest also recently added two used 737-700s on leases to its fleet, says Romo today.

As of today, Southwest has taken delivery of nine 737-800s besides the two leased 737-700s. It has also retired three 737-300s and one 737-500. Southwest has said it plans to retire 13 737 Classic aircraft in 2013.

Southwest will also transfer 16 Boeing 717s to Delta Air Lines this year, as part of a deal it signed in 2012 to sub-lease 88 717s, formally operated by Southwest subsidiary AirTran, to Delta Air Lines.

An ongoing project to add more seats to Southwest's 737-700s is in its final stages, says Southwest today. As of 31 March, almost 90% of the 372 737-700s being retrofitted have the new interior, called Evolve. The remaining will be retrofitted with the additional seats in the second quarter, says the airline.