UPDATE 1-Southwest to delay four aircraft delivery
(Recasts with aircraft delivery delay, new Minneapolis service, quotes)
NEW YORK, Oct 1 (Reuters) - Low-cost carrier Southwest Airlines (LUV.N) on Wednesday said it has delayed delivery of four Boeing Co (BA.N) 737s due next year until 2016.
"We've told you all for some time that our plan is to keep our fleet growth relatively flat next year," Southwest Chief Executive Gary Kelly told reporters on a conference call.
"We are firmly committed with Boeing to ten 2009 deliveries -- it was 14, we deferred four of those until 2016," Kelly added.
Also on Wednesday, Kelly said Southwest would launch service to Minneapolis/St. Paul from Chicago. With the new route, Southwest intends to win business from Northwest Airlines NWA.N, which has long been the dominant carrier in the upper U.S. Midwest.
Northwest is nearing completion of a merger with Delta Air Lines (DAL.N) to form the world's largest airline by traffic. The combined carrier will be known as Delta.
Southwest's new Minneapolis service also represents a further departure from Southwest's traditional strategy of cultivating smaller markets rather than engaging major carriers in hub cities.
"At this point our only decision is to have that one pipe to Chicago," Kelly told reporters. "It's a very cautious approach, but it's one that we can defend."
Kelly also said Southwest has plenty of cash in the bank and modest debt, but that he expects pressure from high fuel prices into 2009.
He said Southwest did not anticipate the current credit crisis that threatens the U.S. economy, but he said the airline was prepared for it. Kelly said it was unclear what impact U.S. economic woes would have on Southwest.
Top U.S. airlines generally have strong cash positions and little need to finance major purchases. But some experts predict a decline in travel demand as travelers become more sensitive to higher fares.
Major airlines are rapidly downsizing to offset their soaring fuel bills. Capacity cuts throughout the industry are likely to cut airline costs and raise fares.
Shares of Southwest closed down 2.14 percent to $14.20 on the New York Stock Exchange. (Reporting by Kyle Peterson and Mark McSherry; Editing by Gary Hill and Carol Bishopric) (mark.mcsherry@reuters.com; +646 223 6094))
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