Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
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- Boeing unlikely to meet FAA’s 90-day deadline for new safety program April 18, 2024
- Focus on quality not slowing innovation, says GKN April 18, 2024
- Boeing defends 787, 777 against whistleblower charges April 17, 2024
- Dissecting Boeing CEO’s statement next new airplane will cost $50bn April 15, 2024
Did Airbus miss opportunities with Alaska, Southwest?
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By Scott Hamilton
Introduction
March 22, 2021, © Leeham News: Airbus lost an order from Alaska Airlines, which means the carrier will essentially revert to an all-Boeing fleet.
Alaska Airlines ordered more Boeing 737 MAXes instead of Airbus A321neos. Southwest Airlines appears ready to order the 737-7 MAX instead of Airbus A220-300s. Were these real opportunities? Photo by Boeing.
And despite the apparent high-profile loss of a potential order from Boeing loyalist Southwest Airlines, Airbus is holding its ground in the USA.
Did Airbus miss opportunities to gain ground?
It all depends on how you look at it.
Summary
- Alaska Airlines chose to eliminate the Airbus A319s and A320s inherited with the 2016 acquisition of Virgin America. It’s not going to retain the orders for A320neos. And it passed on ordering more A321neos when it recently placed a follow-on order for Boeing 737-9s.
- It looks all but sure Southwest Airlines will pass on ordering the Airbus A220-300 for its sub-150-seat fleet requirement. Boeing looks poised to win a big order from Southwest for the slow-selling 737-7 MAX.
- Neither outcome, however, was unexpected.
HOTR: Alaska begins service with 737 MAX
- Alaska likely to cancel A320neo order. Details below.
By the Leeham News Team
March 1, 2021, © Leeham News: Alaska Airlines today launched its first service with the 737 MAX.
The carrier’s first flight was flight AS 482 from Seattle to San Diego, operated with a 737-9.
Alaska is the fourth US airline to operate the MAX. It is the third to use it in service since the type was recertified in November by the Federal Aviation Administration. American and United airlines returned their MAXes to service earlier. Southwest Airlines followed later this month. The Seattle-based airline hadn’t taken delivery of the MAX before the March 13, 2019 grounding.
Alaska is the second carrier to place a follow-on order for the MAX, after Ryanair, following recertification by the FAA. The MAX 9 will replace Alaska’s remaining Airbus A319/320ceos by 2024. Alaska continues to operate 10 Airbus A321neos and still has 30 A320neos on order, all from its acquisition of Virgin America in December 2016. In its annual 10K filing, Feb. 26, with the Securities and Exchange Commission, Alaska said, “At this time, we do not expect to take delivery of these 30 Airbus aircraft.” Alaska disclosed that $15m in deposits for the A320neo order, made by Virgin America, are “not likely to be recoverable.”
Alaska Airlines Boeing 737-9. Source: Woody’s Aeroimages.
The carrier originally ordered the 737-8. Officials later swapped these orders for the larger MAX 9. Alaska’s 737-900ERs are configured with 178 seats compared with the 737-800’s 159 seats. The advertised range of the MAX 9 is 3,550 statute miles with one auxiliary fuel tank. The tank adds about 270 miles to the range of the base specification.
Boeing doesn’t break out the sales of the MAX sub-types. There are an estimated 250-300 orders for the MAX 9, a “tweener” airplane between the MAX 8 and MAX 10.
HOTR: Alaska Air still have A320neos on order; working with Airbus on best path forward
Dec. 29, 2020, © Leeham News: Stories and headlines shouted that this month’s Boeing order by Alaska Airlines adding 23 orders and 15 options to an existing agreement meant the death knell for the Airbus fleet.
Alaska indeed announced that all the A319s and A320s inherited from its acquisition of Virgin America will leave the fleet by 2024. But 10 Airbus A321neos remain at least through their lease terms in 2029.
The airline now has 68 Boeing 737 MAX 9s on order and 52 on option.
This is exactly as LNA suggested several times: rotate out the smaller Airbuses as leases expire and keep the larger A321neos.
COVID-19 accelerated the retirement of the smaller Airbus family members by a couple of years. But it never made sense to keep them in lieu of the 737-9 once Alaska committed to this plane several years ago.
But what of the old Virgin America order for 30 A320neos? These are still on the books.
Alaska Airlines may keep leased Airbus fleet
By Olivier Bonnassies
Airfinance Journal
Oct. 9, 2020, (c) Airfinance Journal: Alaska Airlines is believed to be working on a solution regarding its narrowbody fleet composition after initial talks failed with lessors regarding an early phase-out of Airbus A320-family aircraft.The US carrier approached leasing companies in the summer with a large request for proposals (RFP) to replace its entire leased current-generation A320-family fleet with Boeing 737-800, -900ER, Max 8 and Max 9 models over the next few years.
Alaska Airlines may keep a mixed fleet of Airbus A320s and 737s at least through 2025. Lessors are balking at early returns. Photo: Alaska Airlines.
According to Airfinance Journal‘s Fleet Tracker, Alaska has 10 A319s with leases expiring between 2021 and 2023. Another 41 A320s have leases expiring between 2020 and 2025.
But the objective of the RFP is to accelerate the exit of the carrier’s 51 A320-family aircraft ahead of lease expirations as well as sell 10 owned A320s that were manufactured in 2015 and 2016.
But leasing sources talking to Airfinance Journal say the approach was not “well received”.
“They may keep those aircraft to scheduled redelivery dates,” says one lessor.
Pontifications: There is no good news
May 18, 2020, © Leeham News: There simply is no good news in commercial aviation right now.
By Scott Hamilton
Yes, airport traffic is upticking in the USA (and elsewhere) slightly. But in the USA, it’s still less than 10% of last year’s totals.
There remains a tremendous amount of uncertainty.
- Airbus plans to lay off some 10,000 employees, according to press reports. Another production rate cut seems inevitable.
- Boeing’s CEO revised the forecast for air traffic recovery from 2-3 years to 3-5 years. Production recovery will take another 2-3 years after that, he said.
- Embraer’s biggest customer for the E195-E2, Azul Airlines, deferred deliveries from 2020-2023 to 2024. There haven’t been announcements about deferrals by US carriers for E175-E1s, but there is no reason to believe these won’t be deferred.
- Delta Air Lines says 7,000 of its 14,000 pilots will be surplus to its needs this fall.
- Spirit Aerosystems laid off about 1,700 employees due to Boeing’s production planning.
- Qatar Airways will retire 50 airplanes, defer new orders from Airbus and Boeing and cut the workforce by 20%.
The list goes on and on and on.
Why bailouts make sense under these circumstances
By Scott Hamilton
Commentary
By Scott Hamilton
March 18, 2020, © Leeham News: The Federal government is preparing a bailout, said to be more than $1 trillion, to pump into the US economy.
Airlines want $50bn. Boeing wants $60bn for the aerospace industry. It’s unclear how much is for Boeing and how much is for industry.
Opposition for the airlines and Boeing was quick to emerge. The objection: how much each spent in recent years on shareholder buybacks.
The bailout package goes across the US economy and includes direct cash grants to individuals. In keeping with LNA’s business, I focus in the column only on aviation.
Why the A321XLR makes sense for Alaska Airlines
By Scott Hamilton
Feb. 23, 2020, © Leeham News: Alaska Airlines last week said it will place an order, perhaps this year, for 200 aircraft for delivery over the next decade.
The carrier exclusively operated Boeing 737s until its acquisition of Virgin America. Officials repeatedly put off a decision whether to return to an all-Boeing fleet.
Alaska Airlines Boeing 737-900ER. Source: Alaska Airlines.
Virgin leases for Airbus A319s/320s extend to 2025. The ex-Virgin fleet numbers 61. Leases for Airbus A321s extend to late this decade.
Alaska has 30 A320neos on order from the Virgin merger. However, cancellation rights have small penalties.
The carrier ordered 37 737 MAX 9s. Three were built last year but are stored in the grounding. Seven more are due this year.
Alaska plans to aggressively grow in the next 10 years.
Here’s why converting the 30 Virgin orders to A321neos makes sense.
Pontifications: Catching up on Odds and Ends-Alaska’s Airbus fleet, first E195-E2 delivery, Boeing’s MAX rebranding question
- Take our Boeing 737 MAX rebranding poll at the end of this post.
Sept. 2, 2019, © Leeham News: It’s time to catch up on Odds and Ends.
Alaska Airlines
In its second quarter earnings call and 10Q Securities and Exchange Filing, Alaska Airlines said it was returning one Airbus A319 and two A320s off lease this year and next.
By Scott Hamilton
These airplanes are from its Virgin America acquisition, which introduced the Airbus family into the all-Boeing Alaska mainline operations.
Alaska officials have said several times they are evaluating whether to phase out all Airbuses and return to an all-Boeing fleet, or keep the Airbuses and operate a mixed fleet indefinitely.
I wondered if this was the start of the phase out.
“We are planning to return 1 A319 this year and 2 A320s next year at normal lease expiration,” Brandon Pederson, EVP and CFO of the company, wrote LNA. “This is not part of a broader fleet decision, nor a phase out of the smaller Airbus aircraft. Leases on the remaining 50 A319/A320 aircraft in the fleet have varying maturities through 2025.”
Pontifications: Boeing can’t catch a break
By Scott Hamilton
July 15, 2019, © Leeham News: Boeing can’t catch a break.
Some may argue it doesn’t deserve one, given what’s come out about the 737 MAX development. And the sloppy production of the 787 at the Charleston (SC) plant. And the FOD issues with the KC-46A at the Everett (WA) plant.
To be sure, Boeing has gotten a lot of bad press it’s deserved. But last week, two pieces of news had connections to the MAX that were (1) overwrought and (2) unwarranted.
E175-E2 prototype in production, first flight by year end
May 28, 2019, © Leeham News: The first E175-E2 prototype is now in production at the Embraer plant here at Sao Jose dos Campos, Brazil, despite having no firm orders and only a single conditional order for 100 aircraft from a US airline that so far can’t use the airplane.
The pilot union contracts contain a clause that prevent the only customer for the aircraft in 
the world from using it because the take-off weight exceeds the 86,000 lbs specified in the contract.
Embraer designed the airplane with the hope the so-called Scope Clause would be relaxed in contract negotiations this year and next by pilots for American, Delta, United and Alaska airlines. It’s become clear that relief is unlikely.