ozbiggles, SWA are in the process of replacing their classic 737 fleet with NG 737-700 aircraft. They are still in profit and still the classic model for a LCC.
It is interesting that the founding CEO has always expounded the view that if you look after your staff, the staff will look after your customers and the shareholders will be happy. Something that appears to be lost on the Australian LCC execs (and some mainline companies as well if it comes to that).
As an aside the people appointed to run Tiger all appear to have a background in one of Europe's less successful LCC. Lessons to be learnt here?