Southwest Airlines Co. said Thursday it will take delivery of 25 Boeing 737-700 jets beginning next year to replace some of its older "classic" models of the same plane.
The airline said it has no immediate plans to increase the size of its fleet, currently at 544 planes -- all 737s -- until travel demand picks up.
Southwest said it exercised options to buy 25 planes with delivery beginning next year and running through 2016 to replace less fuel-efficient older aircraft. The airline said it has the right to buy 98 planes through 2021.
Boeing Co. had previously disclosed Southwest's order without identifying the customer. The companies did not disclose financial terms of the transaction. On its website, Boeing lists the 737-700 at between $58.5 million and $69.5 million, although discounts are common for major customers such as Southwest.
Boeing is weighing whether to put a new engine on the 737 -- a major project -- or build an entirely new plane. Customer comments are pushing the company toward a new aircraft, Boeing Chairman and CEO Jim McNerney said this week.
Kelly said Southwest is talking to Boeing about the future of the 737.
"We are in need of a more efficient, cost-effective aircraft; that's our mission," Kelly said. "And we're obviously very hopeful that Boeing can meet our needs."