Additional Boeing 737 Maxes ordered by Alaska Airlines

Alaska Airlines said Tuesday it has ordered another 23 Boeing 737 Maxes, bringing its total order to 68 Maxes that over the next three years will replace most of the Airbus aircraft in its fleet.

The financial terms Boeing offered would have been difficult to pass up. In an interview, Alaska Air Group Chief Executive Officer Brad Tilden said the airline will have to pay no additional money for the 13 Maxes it will take next year.

“This does not actually require any capital spending during 2021,” he said.

That’s because the airline had already paid significant predelivery deposits on its pending orders of Maxes before the plane was grounded in March 2019. Boeing has now restructured the terms with discounts to compensate the airline and encourage the follow-on order.

The cheap Boeing Maxes will replace all of Alaska Airlines’ 51 Airbus A320s and 10 smaller A319s, most of which are on expensive leases inherited from the airline’s acquisition of Virgin America. And since the Maxes are 20% more fuel efficient and new jets should require less maintenance, Alaska expects to reap big operational cost savings.

“With each delivery, our ownership costs go down, our maintenance costs go down, our fuel costs go down, and the revenue should go up because the Max 9 has 28 more seats than the A320,” said Tilden. “The economics are going to be fantastic.”

For Boeing, such discounts on the Max provide compensation to its customers for months of delayed deliveries, without actually giving out cash. And the deals help build sales momentum to arrest this year’s collapse of the Max order backlog.

The airline plans to have its first Max enter service in March, with five more by summer 2021 and another seven by year end.

The plan is to speed deliveries in 2022, with the airline taking 30 Maxes, followed by another 13 in 2023 and 12 in 2024.

The total includes 13 it is leasing from Air Lease Corp. in a deal announced last month. The rest Alaska Airlines will purchase directly from Boeing.

Before the 2016 Virgin acquisition the airline was an allBoeing carrier, and the Max deal will bring it almost back to that by 2023.

The airline said it will keep its 10 larger, longer-range Airbus A321neos. Those jets largely will be used to fly the more popular transcontinental routes due to their superior performance over Boeing’s 737 Max 10 model.

The airline has already begun running its Airbus pilots through the retraining necessary to fly the Max. Each must complete about 80 hours of training.