When the business was first on the drawing board Southwest Airlines had considered the Lockheed Electra L-188 turboprop for its flights between cities in Texas, but they feared passengers would choose competitors who had a better product.
So the airline narrowed their consideration down to 6 different kinds of planes: the Boeing 737-100, Boeing 737-200, DC-9-30, DC-9-10, BAC-111-400, and the Caravelle.
The Southwest Airlines model was largely a copy of intra-California carrier Pacific Southwest Airlines, and PSA flew the Boeing 737-200. It made sense for PSA, so they were always going to give the Boeing 737-200 a hard look.
Aloha Airlines was looking to dispose of leased Boeing 737-200s, but Southwest rejected them. Despite having few flight hours the number of takeoffs and landings from doing high frequency inter-island travel in Hawaii was high and so they’d entail significant maintenance obligations.
Boeing, though, had new 737-200s sitting without a buyer, since their intended customers weren’t expanding after the recession of 1969-1970. They had completed interiors but hadn’t been painted in any livery.
As Founding President Lamar Muse relays in his autobiography Southwest Passage, he and Southwest co-founder Rollin King were meeting with the Douglas Aircraft Company about the DC-9 and called Boeing. They told Boeing that they were about to do a deal with Douglas and Boeing had one hour to make or lose a sale. It was a bluff.
Here are the terms Southwest was offering:
- Southwest would take 3 parked Boeing 737-200s and an option on a fourth
- They’d pay $4 million apiece with no money down, $50,000 payments per month per aircraft for 60 months, and a balloon payment on the balance after five years
- 50% down on spare engines, parts, and equipment necessary to operate the planes, with the other 50% due in 24 months.
As the Douglas meeting got underway, Boeing called back accepting the deal. Southwest went out and hired pilots from Purdue Airlines which was going out of business. Since Purdue was a DC-9 operator they had to pay to send the pilots who weren’t type-certified to fly the Boeing 737 to the United Airlines training facility in Denver.
When Southwest Airlines acquired Muse Air (dubbed ‘Revenge Air’ since Lamar Muse had been ousted from the company and this was his son’s venture), they would have acquired McDonnell-Douglas aircraft but opted to run a separate carrier TranStar Airlines before shutting it down two years later. They acquired Morris Air, a Boeing 737 operator. And they acquired AirTran, but didn’t keep their 717s.
As a result Southwest to this day remains an all-Boeing 737 operation, with over 750 of them in the fleet. And perhaps all because of one phone call.