Alaska Airlines: Boeing or Airbus to replace Virgin America fleet
Alaska Airlines is weighing the question nearly every major airline today faces: order more Airbus A320neo family jets or up its commitments for the beleaguered Boeing 737 MAX.
The Seattle-based carrier needs to replace the 61 leased Airbus A319s and A320s that it inherited from Virgin America by around 2024. Those jets begin returning to lessors later this year, prompting the need for a decision.
Alaska's impending narrow-body aircraft campaign, which will likely kick off this quarter, looks set to be the next major order among U.S. carriers. It will also determine the future of Alaska's long-standing slogan: "Proudly All Boeing."
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“We have an opportunity to replace 61 A319 and A320 aircraft with larger gauge, more efficient assets... [that] would give us the ability to generate more revenue while lower unit cost," said Shane Tackett, Alaska's executive vice president of planning and strategy — and chief financial officer from March — during a quarterly earnings call on Tuesday.
The airline will consider either additional A321neos or more 737 MAX 9s or MAX 10s to replace the outgoing jets, Tackett said. The airline operated 10 A321neos — all via its Virgin America acquisition —and had orders for 32 737 MAX jets at the end of December.
The issues surrounding both the Neo and MAX do not appear to weigh on Alaska's consideration, at least not yet. Production delays have plagued recent A321neo deliveries that, for example, have forced JetBlue Airways to lease additional jets to make up for the shortfall of new aircraft.
The 737 MAX's issues are well known. The aircraft has been under a microscope since it was grounded last March. Under Boeing's latest forecast, the jet is not expected to take to the skies again until the middle of the year.
Alaska is due to take delivery of 10 737 MAX 9s this year, though Tackett called the timeline "uncertain."
"Boeing's challenges with the MAX did cause us to rework the sequencing of events and some of our timing," Nathaniel Pieper, senior vice president of fleet, finance and alliances at Alaska, said about the replacement timing for the A319s and A320s. However, he is confident that the airline will make a decision by the fourth quarter.
Related: Why Alaska Airlines is returning to its routes in the West
Alaska has known about the coming A319 and A320 retirements since it bought Virgin America in 2016. In early 2017, Alaska said it would make a replacement decision by year-end — a decision it has punted every year since.
The carrier already has two aircraft options in its back pocket. Alaska has commitments for 30 A320neo family jets with deliveries from 2022 to 2024 in an order it inherited from Virgin, and options for a further 37 737 MAXes. It could exercise either — or both — of these alternatives if it wanted.
Alaska plans to grow capacity by 3-4% year-over-year in 2020. Part of this is its network pivot back to its strongest markets along the West Coast. The airline has unveiled a number of new north-south routes in recent months, including new flights to Monterey, California (MRY).
Related: Alaska Airlines’ California expansion lands in Monterey
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There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.