Alaska Air Orders Extended-Range Boeing 737s as Demand, Capacity Increase



By Mary Jane Credeur - Jan 25, 2011 2:47 PM MT


Alaska Air Group Inc. ordered 15 Boeing 737 jets amid plans to boost capacity because of higher travel demand, and Chief Executive Officer Bill Ayer may assign some of them to popular seasonal flights to Alaska and Mexico.
Alaska and other U.S. carriers are increasing fares and adding back capacity on routes with the greatest gains. Most of the jets that Alaska ordered are 737-900ER narrow-body planes that can carry up to 27 more passengers and fly longer distances than other 737s. The carrier projected a capacity increase of 8 percent to 9 percent this year.
“There are a lot of places we could put that airplane in our network, especially as our load factors have increased over the years,” Ayer said in a telephone interview. “We have some seasonal differences, strong summer traffic to Alaska and strong winter traffic to Mexico. The airplanes will probably be shifted around the system as we see opportunities.”

Alaska now has about 100 flights to Hawaii from the western U.S. each week, accounting for about 15 percent of its network, Chief Financial Officer Brandon Pedersen said.


The 737-900ER twin-engine jets can carry as many as 215 passengers and fly between most cities in the U.S. and parts of Latin America. The new planes, which include some 737-800s, will be delivered starting next year.
The average price of a 737-900ER is $85.8 million, according to Boeing’s website. Airlines typically negotiate discounts from listed prices.


Alaska disclosed the order in its report on fourth-quarter earnings, which topped analysts’ estimates. Profit excluding a fuel-hedge gain was $47.4 million, or $1.28 a share, the Seattle-based company said today in a statement. Analysts projected $1.02, the average of 14 estimates.


Earnings Top Estimates


Revenue jumped 13 percent to $958.5 million, topping analysts’ projections of $939.6 million.


The carrier said a $17.4 million fuel-hedge gain raised net income to $64.8 million, or $1.75 a share. That’s more than double profit of $24.1 million, or 67 cents, a year earlier.

The carrier also said its Horizon Air regional unit, which is switching to an all-Q400 turboprop fleet made by Bombardier Inc., will drop its stylized sun logo and repaint its planes with Alaska’s Eskimo brand.


Alaska made the change because it’s “more efficient to be promoting one brand rather than two,” Ayer said. Alaska and Horizon will continue to hold separate operating certificates and there are no plans to fully combine them into a single airline, he said.


Alaska rose 37 cents to $61.13 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have increased 67 percent in the past 12 months.