rotornut
13th Mar 2006, 16:34
UPDATE 2-Alaska Air to retire MD-80 planes by end of 2008
Mon Mar 13, 2006 12:08 PM ET
By Christian Plumb
NEW YORK, March 13 (Reuters) - Alaska Air Group Inc. plans to accelerate deliveries of Boeing Co. 737 aircraft after deciding to retire all of its Boeing MD-80 planes by December 2008, the company said on Monday.
The move to a single fleet type, which is being taken to lower maintenance and fuel costs, will result in after-tax charges of between $160 million and $190 million for retiring 15 MD-80 planes and returning 11 that are leased, Alaska said in a regulatory filing.
The move also expands the fleet size and available seats of Seattle-based Alaska, the ninth-largest U.S. airline.
Alaska said that as part of the changeover, it planned to take delivery of 39 Boeing 737-800s between 2006 and 2008, compared with an earlier plan to take 35 new planes between 2006 and 2011.
In June, Alaska announced a $2.3 billion deal to buy 35 of the aircraft and said it could acquire up to 15 more, for a total of 50 purchase rights. It now plans to buy an additional 13 planes through 2011, for a total of 52 purchases.
The move will boost Alaska's fleet to 114 planes from 110 at the beginning of this year and increase capacity by 18 percent by the end of 2008, even as many larger rivals have been trimming available seats.
Retiring the MD-80s will require an investment of about $750 million, Alaska Air said in a statement, adding that it expected to save more than $115 million a year in operating expenses once the transition is completed.
"When we look at cost savings that are available to Alaska Airlines at this point, there is not a lot of low hanging fruit left," said Wells Fargo analyst Peter Jacobs.
"The next logical step would be to gain additional efficiencies in the fleet operations," he said. "That is what moving to an all-737 fleet brings."
Alaska Air shares were up 18 cents at $30.52 in midday New York Stock Exchange trade.
Alaska said in October that it would inspect its MD-80 aircraft to make sure that it was properly maintaining a tail mechanism that had been implicated in January 2000 crash.
That followed a U.S. Federal Aviation Administration investigation of complaints by a mechanic about possible maintenance shortfalls.
Alaska has disputed the claims and said it never compromised safety.
Jacobs said he did not think the accelerated retirement plan stemmed from safety concerns. Alaska did not immediately return a phone call seeking comment on the safety issue.
© Reuters 2006
Mon Mar 13, 2006 12:08 PM ET
By Christian Plumb
NEW YORK, March 13 (Reuters) - Alaska Air Group Inc. plans to accelerate deliveries of Boeing Co. 737 aircraft after deciding to retire all of its Boeing MD-80 planes by December 2008, the company said on Monday.
The move to a single fleet type, which is being taken to lower maintenance and fuel costs, will result in after-tax charges of between $160 million and $190 million for retiring 15 MD-80 planes and returning 11 that are leased, Alaska said in a regulatory filing.
The move also expands the fleet size and available seats of Seattle-based Alaska, the ninth-largest U.S. airline.
Alaska said that as part of the changeover, it planned to take delivery of 39 Boeing 737-800s between 2006 and 2008, compared with an earlier plan to take 35 new planes between 2006 and 2011.
In June, Alaska announced a $2.3 billion deal to buy 35 of the aircraft and said it could acquire up to 15 more, for a total of 50 purchase rights. It now plans to buy an additional 13 planes through 2011, for a total of 52 purchases.
The move will boost Alaska's fleet to 114 planes from 110 at the beginning of this year and increase capacity by 18 percent by the end of 2008, even as many larger rivals have been trimming available seats.
Retiring the MD-80s will require an investment of about $750 million, Alaska Air said in a statement, adding that it expected to save more than $115 million a year in operating expenses once the transition is completed.
"When we look at cost savings that are available to Alaska Airlines at this point, there is not a lot of low hanging fruit left," said Wells Fargo analyst Peter Jacobs.
"The next logical step would be to gain additional efficiencies in the fleet operations," he said. "That is what moving to an all-737 fleet brings."
Alaska Air shares were up 18 cents at $30.52 in midday New York Stock Exchange trade.
Alaska said in October that it would inspect its MD-80 aircraft to make sure that it was properly maintaining a tail mechanism that had been implicated in January 2000 crash.
That followed a U.S. Federal Aviation Administration investigation of complaints by a mechanic about possible maintenance shortfalls.
Alaska has disputed the claims and said it never compromised safety.
Jacobs said he did not think the accelerated retirement plan stemmed from safety concerns. Alaska did not immediately return a phone call seeking comment on the safety issue.
© Reuters 2006