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Southwest converts options for 40 more 737 Max 8s

Southwest Airlines has exercised options for 40 Boeing 737 Max aircraft, and deferred the majority of its 737 Max 7 orders to 2023 and beyond.

The Dallas-based low-cost giant is boosting its orderbook as it expects a $1 billion to $1.5 billion reduction in income tax expenses in the fourth quarter of 2017, following the recent tax reform bill.

Southwest will receive 15 of the 40 additional 737 Max 8s in 2019 and the remaining 25 in 2020, it says.

The airline has also deferred deliveries of 23 737 Max 7s - the majority of its 30-aircraft order for the variant - to 2023 and 2024. The 23 aircraft were initially scheduled for delivery from 2019 through 2021, but Southwest will now receive 12 in 2023 and the remaining 11 in 2024.

An updated fleet plan shows that the airline will add only seven 737 Max 7s in 2019.

The orderbook changes will "support future growth opportunities and fleet modernisation at favourable economics," says Southwest. It expects less than $1 billion in capital commitments for firm deliveries in 2018, and about $1 billion annually in capital commitments for 2019 through 2022.

The airline's capacity growth plans for 2018 remain unchanged. It had previously said it will grow capacity at less than the 5.7% growth it saw in 2016. It expects capacity to rise around 3% to 4% in the first half of 2018.

Following the fleet changes, the airline's historical orderbook for the 737 Max 8 grows to 210 aircraft. It took delivery of its first in August 2017.

It now has 155 options for the 737 Max 8.

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