Boeing 737-900(ER) helps keep Alaska Airlines in the black

Alaska Airlines 737-990(ER) (41732/4296) N408AS arrives in Anchorage at Ted Stevens International Airport (ANC/PANC) on May 5, 2013.

(Photo by Michael Carter)

Alaska Airlines added 8% in capacity year-over-year in the third quarter, but most of the increase was due to replacing smaller aircraft with larger ones and adding seats to existing fleets, the carrier’s executives said in a conference call with analysts this week.
                                                                       
Alaska has taken delivery of 10 Boeing 737-900ERs so far this year and by 2017 will add 36 more. The 737-900ERs are replacing the carrier's 27 older 737-400s and have 37 more seats at roughly the same fuel burn, CFO Brandon Pedersen said. 

“We ended the quarter with 22 of these impressive airplanes, and they allowed us to generate up to 15% more capacity on high load factor routes without additional frequencies,” said Andrew Harrison, senior vice president of planning and revenue management. 

Alaska also said it has added new slimline seats to 55 of 61 Boeing 737-800s, which has allowed to add one row to the aircraft. The final six aircraft will be fitted with new seats later this year. Alaska estimates the additions will give it an incremental revenue boost of about $25 million in 2015. 

The third quarter was successful for Alaska, with the carrier reporting net income, excluding special items, of $200 million. Load factor was 86%, roughly flat compared to a year ago.
 
Alaska made fewer changes to its network in the third quarter compared to recent reporting periods. Three cities--Detroit, Baltimore and Albuquerque, New Mexico—were added. Alaska is operating to the new cities from its Seattle hub, where it is fiercely competing with Delta Air Lines. Two other new routes, from Las Vegas to Mammoth Lakes, California and another from San Diego to Kona, will start soon as leisure routes but will not be flown daily.
 
In the call, Alaska downplayed the competition with Delta, but executives acknowledged that codeshare revenue continues to decrease. Harrison said Delta interline and codeshare revenue declined about $38 million during the quarter.

Alaska said it recovered all but 5% of that revenue by more aggressively selling its own flights and by taking advantage of codeshare and interline agreements with other airlines. With American Airlines, codeshare and interline revenue was up 10%. 

On a route-by-route basis, some are not performing as well since Delta entered the market, Harrison said. "Obviously, where this heavier competitive capacity comes into our market, they tend to marginally underperform our system average," he said. 

In the second quarter, Alaska opened a focus city in Salt Lake City, which has not yet fully matured, Harrison said. "What we've found generally with Salt Lake City is we perform much better when it's into our core Pacific Northwest hubs," he said. "The other West Coast key city flying, they're a little bit more challenging, obviously. We're continuing to work that." Harrison said the airline is working on better marketing itself in the new market.
  
Also on the call, Alaska said it is earning increased revenue on its new discounted first class fare bucket introduced earlier this year. The goal is to stimulate demand during weak periods. Only about half of Alaska's markets now have the new fare, but Alaska said the new fare should be fully rolled out by early 2015.

(Brian Sumers - ATWOnline News)