Alaska's on-again, off-again love for Boeing

The airline again flies Airbus jets and will for the foreseeable future. Will it ever order new planes from the manufacturer?

Dear readers,

I’ve been thinking recently about Seattle’s two big aviation juggernauts: Alaska Air Group, and Boeing, and the relationship between them. I’ve long been confused about why a company as large as Alaska Air Group has been so tied to one supplier for mainline jets, though I gather it is a mixture of efficiency and regional pride.

Alaska is clearly committed to Boeing, as evidenced by the way it has marketed its proudly all-Boeing fleet, even if that isn’t entirely accurate. But airlines as big as Alaska now increasingly prefer to fly aircraft from multiple manufacturers, and Alaska seems headed that way, too.

Having a single supplier was once considered brilliant strategy, pursued by visionary CEOs like Herb Kelleher and Michael O’Leary, who viewed an airline seat as a commodity product and wanted to keep operations simple and costs low. But over the past decade, the exposure inherent in that strategy has become extremely evident. Airline executives, who complain about airframe delivery delays and defects, and whine about unreliable engines, want a Plan B.¹

I think the commercial rationale has changed too. Network planners perhaps once considered airplanes with similar capacity and fuel burn to be interchangeable, but today I sense they’re more selective about which airplanes should fly where. Executives from Air Canada and United have both told me in the last year that a 787 is not the same as an A350, as each has different strengths (the A350 tends to be more capable on longer routes). Likewise, we see this with the A321neo versus the 737-10; the A321neo is slightly bigger and has impressive range, but the Max is very efficient. It’s no longer dumb for an airline to consider both.

This brings us back to Alaska. The question that so many in this industry (not to mention the airline nerds) want answered is this: how will the company handle Hawaiian’s motley fleet?

We know Alaska is enamored with Hawaiian’s 787 order book, but the rest of it is murky. Will Alaska retain the A321neos? Or the A330s? And what about those 717s? Unlike some of its competitors, Alaska is pretty open about that stuff, and CFO Shane Tackett² shared quite a bit about the airline’s thinking at the Goldman Sachs Industrials and Materials Conference last week. Let’s get into the details.