Credit: Alaska Airlines
Alaska Air Group is unsure how many aircraft it will receive from Boeing in 2024, and over the longer-term the airline may opt to add fewer 737 MAX aircraft than it originally expected.Most of Boeing’s customers face some level of uncertainty in the delivery stream after an inflight blowout of an exit door plug on an Alaska 737-9 flight in early January. Major organizational safety problems have emerged at Boeing since the incident, and the manufacturer has slowed 737 production.Seattle-based Alaska along with United Airlines had to ground and inspect their 737-9 fleets and gain FAA approval before they were returned to service.
The airline was originally scheduled to add 23 MAX aircraft to its fleet in 2024. Alaska’s CFO Shane Tackett said during an April 18 earnings discussion that Boeing has 10 of the airline’s aircraft that are essentially built and undergoing a final review and ticketing process. “So, we expect to get all of those and probably some additional units beyond that ... we’re thinking somewhere between 10 and 20,” Tackett said. Many of those aircraft are replacing the airline’s older 737-900s, Tackett said. The Aviation Week Network Fleet Discovery database shows Alaska has 10 737-900s in service and two parked.
Alaska’s delivery stream over the longer-term is tough to determine as Tackett said, “there are two or three moving pieces there,” including Boeing’s ability to “get back to production rates that can support a consistent and reliable delivery stream.”
Tackett also said Alaska prefers “the MAX 10 at this point,” explaining the company needs to make decisions based on when the aircraft gains certification. “I think it’s going to come later than we expected, which was the second half of next year,” he said. The Fleet Discovery database shows Alaska’s orderbook comprises 45 737-10s, 15 -8s and 20 -9s.
If Alaska’s proposed acquisition of, and merger with Hawaiian Airlines proceeds, “we’ve got another 60 to 65 aircraft to think about along with the 330 or so we have today,” Tackett noted.
Alaska needs to take time to evaluate all of those variables “and put together a new skyline for the Boeing MAX deliveries,” Tackett said. “I think directionally it will probably be less than we had been thinking about even a year ago.”
For the second quarter, Alaska expects 5-7% capacity growth year-over-year; for the full year, Alaska sees capacity growth at less than 3% compared to 2023. The airline said its 2024 capacity growth could be subject to further adjustments regarding its aircraft deliveries.
Similar to United Airlines, the 737-9 grounding triggered a first quarter (Q1) net loss for Alaska of $132 million, narrowed from its $142 million a year prior. The grounding of Alaska’s 737-9s resulted in $150 million in lost revenue. The company’s Q1 unit revenues increased by 3.8% year-over-year, and absent the groundings, Alaska would have posted 5% growth. The airline’s Q1 expenses increased 1% year-over-year to $2.4 billion and overall Q1 revenue grew 2% to $2.2 billion.
Alaska said it received $162 million in “initial” cash compensation from Boeing to address the financial damages incurred during the first quarter.
United said in an April 17 regulatory filing that it has forged a confidential agreement with Boeing for compensation regarding the 737-9 groundings and a separate agreement to accommodate 737-10 certification delays.
“The compensation provided by Boeing for the grounding damages and in connection with rescheduling deliveries is in the form of credit memos for use on future purchases from Boeing,” United said.
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