Alaska Airlines has revealed that it will lose around 1% of capacity in the third quarter and that this could get worse as the year rolls on. The airline was expecting at least one 737 MAX to have been delivered by now, and three by the end of the year. As such, they will hold on to the Q400 turboprop in a bid to maintain seat capacity.
Keeping the Q400
Alaska began moving away from the Q400 towards the end of 2017. The regional turboprops, all operated by subsidy Horizon Air under the Alaska Airlines brand, were due to be phased out and replaced by the Embraer 175 regional jet. Currently, Horizon has 31 Q400s still in service and has already taken delivery of 29 of their 33 ordered Embraers.
By all rights, a good number of the Q400 should be leaving the fleet right now, but due to the grounding of the 737 MAX, Alaska have opted to keep them on. Some of these aircraft are pushing 20 years old, although a handful have had less than five years in service.
However, in a recent analysis call following its Q2 results posting, Alaska Airlines has said that the Q400 will be kept on a little longer to replace lost capacity from the non-delivery of the 737 MAX. In addition to delaying the retirement of the type, the revised fleet plan shows Horizon bringing back two Q400s which were previously retired by the end of 2019. This will bring their operational fleet of the type to 33.
The airline ordered 32 of the 737 MAX 9 aircraft back in 2014 and was expecting delivery of the first by July this year. By the end of the year, they should have had three in service.
Alaska still hopes to take delivery of one 737 MAX before the end of the year (pending the type being cleared for use again) and expect another two early in 2020. However, even when Boeing start delivering the MAXs, there’s likely to be a backlog of deliveries for some time going forward too. In the meantime, the turboprop workhorse that is the Q400 will have to keep going.
Capacity issues ‘not as acute’ as for some carriers
Although Alaska airlines have lost some capacity due to the grounding of the 737 MAX, they’ve got off relatively lightly compared to some operators. When the plane was grounded, they had a total of zero in service, although they should have taken delivery of some by now. Executive Vice President Finance and Chief Financial Officer, Brandon Pedersen, said at the recent earnings call,
“We do have MAXs coming in next year, our MAX exposure was pretty darn small, we were supposed to get three in the last few months of this year. It’s perhaps one now. Those two that we are not going to get this year, will probably come, if things play out like we’re hearing they might play out, in the first quarter. So, the capacity issue for us isn’t nearly as acute as it is for some other MAX operators.”
Will they keep the A320 longer?
A more logical replacement for missing MAX aircraft would be the Airbus A320, of which they have many. Originally an all-Boeing airline, their acquisition of Virgin America’s fleet meant an influx of multiple A320 family aircraft, many of which were leased.
With leases due to expire between 2020 and 2024, a portion of these aircraft are set to leave the fleet by the end of next year. With the likelihood of their MAX deliveries being somewhat slower than initially thought, could Alaska extend the lease on these Airbus planes to tackle the lost capacity?
According to Pedersen, no. When asked just this question, he responded that,
“…we have three A319/320 airplanes that are due to be returned between now and the end of 2020 and we’re going to stick with that for the time being.”
Do you think Alaska are right to rely on the Q400 to maintain capacity? Or should they have extended the lease on those three A320s instead? Let us know in the comments.