Alaska Airlines gives Boeing a big order with an eye to expansion

Alaska Airlines, the fifth-largest passenger airline in the United States, said on Wednesday that it would buy dozens more Boeing planes in the coming years as it aims to rapidly expand its fleet and convert it to a single aircraft family.

The airline plans to buy 52 Boeing 737 Max planes through 2026, in addition to 94 already on order. The planes are a mix of the Max 9 and Max 10 variants and will help Alaska achieve its goal of becoming an all-737 operator by the end of next year. The airline also has an option to buy 105 more planes by the end of the decade.

“This is the biggest fleet announcement in Alaska’s history,” said Nat Pieper, an Alaska executive who oversees fleet and airline alliance strategy. “This deal with Boeing ensures access for us for sufficient aircraft through 2030 for our replacement needs, and for our growth levels that we anticipate achieving in that time.”

Flying a single type of plane yields benefits to airlines, making it easier to reassign pilots, swap planes and maintain a uniform inventory of parts. Alaska expects to save about $75 million to $100 million annually from the simplification of its fleet, Pieper said. Southwest Airlines, the nation’s third-largest carrier, also operates an all-737 fleet.

Alaska’s order comes as its position in the industry is under threat. JetBlue Airways, the sixth-largest domestic airline, plans to buy Spirit Airlines. If that deal goes through, JetBlue would easily leapfrog Alaska in market share, though it is unlikely to immediately threaten Alaska’s strength on the West Coast.

The new Max jets will allow Alaska to expand its hold there while also adding more transcontinental service, Pieper said. The Max 8 variant has fewer seats than the Max 9, but more range, making it well suited to longer flights, such as those between the West Coast and Hawaii, he said. The Max 10 has the most seats, optimal for heavily trafficked routes.

Alaska and Boeing share a strong bond: Alaska is headquartered in Seattle, where Boeing produces the Max and other planes. The airline had previously flown only Boeing aircraft, but acquired dozens of planes produced by Airbus, Boeing’s rival, when it bought Virgin America in 2016. Alaska said it expected to replace those Airbus planes with Boeings by the end of next year, an example of how long it can take to finalize airline mergers and acquisitions.

Alaska’s regional subsidiary, Horizon Air, uses dozens of jets made by Embraer and Bombardier for shorter flights or less-trafficked routes and is also phasing out the Bombardier aircraft.

The Wednesday order is part of a spate of ambitious purchases announced as the industry has emerged from the depths of the pandemic.

Last year, Southwest announced plans to buy 100 Max planes, while United Airlines said it planned to buy 200 Max jets and 70 Airbus planes. This summer, Delta Air Lines said it planned to buy 100 Max 10s, with the first deliveries expected in 2025.

Boeing is racing to meet an end-of-year deadline to get the Max 10 certified by federal regulators. If it fails to do so – or fails to get an extension passed by Congress – it will have to substantially overhaul the plane’s pilot-alerting system to meet more stringent standards. Boeing and others have argued that the overhaul would be costly and counterproductive, leaving the Max 10 with a different system from other 737s.

Alaska said it did not plan its first Max 10 delivery until the summer of 2024 and would take Max 9s if the Max 10 was unavailable. Delta’s chief executive, Ed Bastian, said this month that the airline had a “plan B” if the Max 10 was not certified.

Pieper said Alaska planned to pay cash for all the planes received this year and next year and many of the deliveries scheduled for 2024. “The best thing we can possibly do for that next rainy day is to pay cash for airplanes,” he said.