Alaska Airlines places bet on 737 Max

SEATTLE -- Days after the Federal Aviation Administration cleared Boeing's 737 Max to fly passengers again, Alaska Airlines became the first carrier to expand its fleet of the aircraft.

Alaska announced Monday it will lease 13 Maxes from Los Angeles-based Air Lease Corp.

Alaska already has 32 Maxes on order directly from Boeing, five of which are expected to be flying by next summer. Alaska will begin flying the 737 Max 9 in March.

Following so soon after the plane's grounding was lifted, the transaction indicates that airlines willing to take new jets in the middle of a historic aviation downturn can get good deals.

Air Lease Corp. has 138 Maxes on order, one of the largest commitments to the plane among lessors. With airlines around the world having parked many of their aircraft because of low demand for air travel, airplane leasing companies are scrambling to place their jets.

Alaska, like Southwest in the U.S. and Ryanair in Europe, is seeking to take advantage of the downturn to strengthen its position and even increase its market share as rivals contract.

In a Nov. 15 internal message to the airline's pilots, Capt. John Ladner, Alaska's vice president of flight operations, cited a maxim he described as "what successful companies do when the going gets tough."

"Never let a good crisis go to waste," Ladner said, quoting Harvard Business School professor Ranjay Gulati, a guest speaker at a recent Alaska leadership planning session.

Ladner reminded the pilots that after the 9/11 terrorist attacks in 2001, Alaska successfully expanded its East Coast routes. Then, during the 2008 global economic downturn, it expanded service to Hawaii.

"Alaska Airlines' leadership has a proven track record of using challenging times to fortify our future," Ladner told the pilots. "I'm looking forward to the moves we make to take advantage of this latest crisis."

The Air Lease deal will eventually allow Alaska to shed some of the Airbus A320s it acquired with Virgin America in 2016 and replace them with Maxes. The Seattle-based airline had an all-Boeing fleet before the Virgin acquisition and has said recently it wants to retain only the longer-range A321neo Airbus jets.

Brad Tilden, Alaska Air Group chairman and chief executive officer, said the deal is "an opportunity to sell 10 planes that are not in our long-term plans and replace them with 13 of the most efficient narrow-body aircraft available."

Alaska will sell 10 Airbus A320s and subsequently take delivery of the 13 new Boeing 737 Max 9s from the fourth quarter of 2021 through 2022.

Alaska said it will lease the A320s back from Air Lease for a short time after the transaction closes.

After permanently parking all A319s and some A320s this summer, this deal leaves Alaska Airlines with 39 A320s in the operating fleet along with 10 A321neos.

In a statement, Air Lease Executive Chairman Steve Udvar-Hazy said the 737-9 Maxes will bolster Alaska's fleet "just in time as we expect the airline industry will undergo a sustainable recovery starting in 2021."

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