Tuesday, July 18, 2017

Alaska Air CEO weighs in on replacing Virgin America's Airbus fleet with Boeing jets

Alaska Airlines will likely shed the Airbus jets it inherited in its takeover of Virgin America and slowly replace them with Boeing aircraft, Alaska Air Group CEO Brad Tilden said Tuesday.

"My dad was a 32-year Boeing guy," Tilden told a Seattle business audience at a breakfast organized by the Puget Sound Business Journal. "This company could not be more in love with Boeing, or loyal to Boeing."

"We actually just need to get this worked out with Boeing because we have 63 – growing to 73 – Airbus airplanes and they'll likely be in the fleet for some number of years," Tilden continued. "If I were to guess, they won't be in the fleet permanently."

"It will take some time to get a transition done," Tilden added.

Airline industry analysts have speculated for months that Alaska Airlines would phase out Virgin America's Airbus fleet, much of it involving leased aircraft, but Tilden's remarks were his clearest yet in terms of the airline's long-term plans for the Airbus planes it inherited.

In February, Alaska Air executives revealed they were working to extricate the company from a lease deal that Virgin America signed before the takeover. The deal involved 10 Airbus A321neo (new engine option) jets.

In a securities filing last year before the takeover by Alaska, Virgin America reported maintenance costs for its Airbus aircraft fleet increased a whopping 33 percent to $16.9 million during one financial quarter.

Virgin America had five major jet maintenance events during the 90 days compared to none in the 2015 period.

Though Virgin took delivery of a trio of new Airbus A320 aircraft, it also warned that the average age of the Airbus A320 jets in its fleet was 6.3 years, and those aircraft were starting to need more "scheduled and unscheduled maintenance" as they get older.

"These more significant maintenance activities result in out-of-service periods during which certain of our aircraft are unavailable to fly passengers," Virgin said at the time.

Alaska's fleet is mostly made up of Washington-made Boeing 737 jets, but its Horizon subsidiary also operates Embraer E175 regional jets and twin-propeller Bombardier Q400 aircraft.

The morning breakfast event at Seattle's Rainier Club was organized by the Puget Sound Business Journal and featured Tilden in a conversation with Providence St. Joseph Health CEO Dr. Rod Hochman.

(Andrew McIntosh Puget Sound Business Journal)

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