Alaska Air Group executives said they won’t use all of the Airbus A321neo jets Virgin America agreed to lease before Alaska’s $2.6 billion takeover.
The statements show Alaska executives are still keen on a predominantly Boeing fleet. Adding more Airbus aircraft to the fleet could give Alaska Air more negotiating power with Boeing, but the diversity would reduce the efficiencies of standardized training, maintenance and operations.
SeaTac-based Alaska Air (NYSE: ALK) inherited 10 firm orders for new leased Airbus A321neo jets and another 30 orders that are cancelable, Chief Financial Officer Brandon Pedersen said on a conference call after releasing fourth-quarter and full-year financial results.
“Virgin America will be the worldwide launch customer for those aircraft, which will be configured with 185 seats, and we are very anxious to see how they perform,” Pedersen said.
He revealed Alaska is working with leasing giant GE Capital Aviation Services (GECAS) on “an arrangement where we don’t take all 10 that are scheduled to be delivered over the next two years.”
In late 2015, Virgin agreed to lease 10 A321neos from GECAS, with the first to be delivered this spring and the rest through 2018.
Alaska also has 54 firm orders for Boeing airplanes including the new 737 Max, and will take delivery of 12 jets this year, Pedersen added.
Alaska President and Virgin America CEO Ben Minicucci called the Airbus single-aisle jet a great airplane, but hastened to add: “As you know, we love Boeings.”
Virgin America operates an all-Airbus fleet of 63 jets with neon-lit interiors and nightclub-like atmosphere with seat-back entertainment.
Minicucci said Alaska is learning a lot about the Airbus planes since taking over Virgin America, but noted Alaska’s success has always relied on placing “the right airplane in the right market” and thinks the Airbus A321 has limited use on transcontinental routes.
“We think it’s a better north to south airplane,” he said, later continuing, “Whether they go to Hawaii or transcon, I think we will make the right decision to maximize their potential.”
Alaska CEO Brad Tilden said it will take six to nine months to decide the Airbus jets’ role in the fleet.
Alaska staff are talking with GE and Airbus “to see if we can reduce that commitment to A321s or put that off a while we go through this process to make the right long-term decision,” Tilden added.
Airbus jets aren’t the only non-Boeing aircraft now in Alaska’s fleet. It also flies Bombardier Q400 turboprop aircraft and a fast-growing fleet of Embraer regional jets.
Alaska is taking delivery of 18 Embraer E175 regional jets in 2017, adding them to 25 it already operates across smaller markets.
Alaska will also take delivery of 12 Boeing 737-900ER (extended range) jets this year to replace 10 older 737-400 jets to be retired by year-end.
Puget Sound Business Journal
