Southwest Airlines began 2019 by celebrating its 46th straight year of profitability and a record-setting $2.5 billion in profits. Its low fares and wide network, with 753 aircraft serving 101 cities in North America, made Southwest the airline of choice for one out of every five domestic air travelers today. But now, Southwest's bet on the Boeing 737 Max as its airplane of the future might end its streak — and threaten its bottom line for years to come.

Since 1987, Southwest has almost exclusively flown a single airplane model: the Boeing 737. That allowed the airline to save on training and maintenance (they would only need one type of simulator, and one common spare parts inventory), and to make skilled personnel such as pilots and mechanics essentially interchangeable, in case someone calls in sick or misses a connection. Southwest was scheduled to replace the oldest jets in their fleet with brand-new 737 Max airplanes, allowing them to burn 5 percent less fuel per flight while carrying up to 20 percent more passengers. And according to one analyst, almost 8 percent of Southwest's flight capacity was supposed to be flown on its 34 new 737 Maxes.

In an industry that famously obsesses over the cost of each olive, these penalties can add up quickly. Legacy carriers, such as American Airlines, have estimated that each grounded Max costs them just under $50,000 a day in lost revenue and efficiencies. For Southwest, it's closer to $67,000 per day, per airplane. As the largest operator of Maxes in the world currently, Southwest has estimated that the groundings reduced their income by $225 million for the first six months of the year. For the remainder of the year, the number might balloon: American Airlines, for example, now believes the groundings will cost it $400 million for the full year, $50 million higher than it estimated back in April. And it only has 24 Maxes flying 5 percent of its total flight capacity.

airlines have little choice but to eat the costs

Boeing, for its part, has earmarked over $5 billion before taxes to reimburse airlines for Max-related costs — enough to weather a yearlong grounding, assuming that most operators incur something like American Airlines' estimate of $50,000 per day.

And airlines have little choice but to eat the costs. They can't buy Airbus' competing airplane, the A320neo, because it has over 5,000 backorders; an order placed today won't arrive for three years. And it can be prohibitively expensive to lease their way out, with short-term lease rates for 737s increasing by 40 percent since the groundings. Carriers with mixed fleets can at least make do with a motley collection of older airplanes. But this isn't an option for most low-cost carriers.

Originally founded in 1967 to connect Dallas, Houston, and San Antonio, Southwest Airlines brought its low-fare strategy beyond Texas following the Airline Deregulation Act of 1978 — the law that permanently removed route and price controls for airlines in the United States (and which it had previously argued successfully did not apply to it as a single-state airline).