Seattle-based Alaska Airlines has announced that it will convert 12 more Boeing 737 MAX 9 options into firm orders. Set for delivery in 2023 and 2024, the added aircraft will continue the airline’s growth and fleet optimization strategy. In addition, the airline is also backfilling the options it added in 2021, which could set Alaska on track for major growth.
Alaska Airlines exercises options for 12 more jets
Alaska Airlines announced today that it is exercising 12 more options for Boeing 737 MAX 9 aircraft for delivery between 2023 and 2024. Ten of these 12 aircraft will be delivered in 2023, with the remaining two arriving in 2024.
This brings the airline’s overall fleet delivery schedule to the following:
|Original Firm Order||12||31||13||12||68|
|May Option Exercise||-||-||9||4||13|
|August Option Exercise||-||-||10||2||12|
Nat Pieper, Alaska Airlines Senior Vice President of Fleet, Finance, and Alliances stated the following on the exercise of options:
“We are excited to accelerate Alaska’s growth, building on our solid financial foundation that enabled us to weather the pandemic. These aircraft are a prudent, long-term investment in our business that we can make while simultaneously maintaining our strong balance sheet.”
Alaska has five MAX 9s in service currently. These jets are configured to carry 178 passengers. This includes 16 in recliner-style first class, 24 in extra-legroom economy class, and 138 in standard economy. These aircraft have performed well for Alaska Airlines, as Mr. Pieper stated:
“Boeing continues to be a terrific partner for Alaska. We began flying our first 737-9s this past spring, and we’re extremely pleased with the operational, financial and environmental performance of the aircraft. The planes are exceeding our expectations – from how quiet the engines run to the greater range they provide – and our guests love them.”
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Where Alaska stands with the MAX
In December 2020, Alaska Airlines announced a restructured agreement with Boeing to acquire 68 MAX 9 aircraft between 2021 and 2024. This order came with options for 52 more aircraft between 2023 and 2026.
In May, the airline exercised options for 13 more aircraft. This raised the airline’s total order to 81 aircraft with options for 39 more aircraft. Now, in August, it added 12 more aircraft to its firm backlog, adding 25 new aircraft this year.
Also, Alaska Airlines has announced it is adding 25 options to backfill the ones that have already been exercised. This takes Alaska’s firm order to 93 aircraft with 52 options.
Unwise to rule out future orders
On the carrier’s fourth-quarter earnings call, Shane Tackett, Chief Financial Officer at Alaska Airlines, stated the following on the airline’s history with options:
“Our history with options is we take all of them. And so it could be quite a large order for us and a significant amount of capital that we’ve got to go make work for us. So I think we feel very good about the deal that we struck with them.”
If Alaska Airlines exercises the remaining 52 options it has, it will have a total of 145 Boeing 737 MAX 9 aircraft in its fleet. This will be a huge promoter of growth at the airline, as the carrier charts its post-crisis strategy.
How Alaska Airlines will deploy the aircraft
In June, Brett Catlin, Alaska’s Vice President of Network and Alliances, discussed plans for long-term network maturity. He stated:
“I would say our growth over the next three to five years is probably less about new routes, and more about filling in the routes we already have. So if we’re operating once a week in a market like San Francisco-Cancun, that should be a daily market. If we’re operating twice a day in Seattle-Atlanta, that should be a five daily market. So we really want to start to grow across our existing network, focusing a little bit less on breadth and more on building up the network and adding more depth.”
These MAX jets are going to be a huge part of that growth. Alaska Airlines has announced it is reactivating at least 10 Airbus A320 aircraft to support the recovery and network growth. Alaska Airlines has shown it needs new aircraft, most recently announcing a new Mexican expansion out of San Francisco.
Alaska Airlines is also on the trajectory of becoming more of a national brand. CEO Ben Minicucci previously stated that his goal is to give the carrier more national brand recognition, including in key markets like New York.
The Boeing 737 MAX 9s are the perfect aircraft to add more frequencies and build schedule depth. As larger aircraft, they provide lower unit costs while being incredibly fuel-efficient and with more passenger-friendly amenities and interiors. Out of hubs like Seattle, Portland, San Francisco, and Los Angeles, Alaska can add incremental capacity on marginal cost additions and add more power to its hubs.
With the airline’s entry into the oneworld alliance, the carrier now has access to deep global partnerships. With various airlines, especially American Airlines, gearing up to add international flying out of Seattle as the recovery unfolds, Alaska Airlines will need the extra capacity to provide feed to those flights and cater to Alaska’s goal of becoming more well-known across the US.
Altogether, the MAX 9 options exercised today are part of Alaska’s long-term strategy and should serve the airline well. The carrier certainly needs more aircraft and still plans to replace the Airbus A320s it is reactivating in favor of the Boeing 737 family of aircraft.
What do you make of Alaska exercising options for 12 more Boeing 737 MAX 9 aircraft? Let us know in the comments!