ASA to drop MD80s, go full B737

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[ Southwest effect strikes again. -Ed. ]

http://seattlepi.nwsource.com/busine..._alaska14.html

Alaska going to an all-Boeing 737 fleet

Tuesday, March 14, 2006

By JAMES WALLACE

Like Southwest and other low-cost airlines that save money by flying
only one kind of jetliner, Alaska Airlines will be operating nothing
but Boeing 737s by 2009.

The Seattle-based airline announced Monday an accelerated plan for
phasing out its 26 MD- 80s by the end of 2008.

The move will significantly reduce Alaska's fuel and maintenance costs,
executives said.

Under its old plan, Alaska would have kept some MD-80s in service until
2017.

"We are growing with a fuel-efficient, comfortable and reliable
airplane (the 737)," Bill Ayer, Alaska's chairman and chief executive,
told reporters and analysts in a conference call. The decision
eventually will mean more 737 orders for The Boeing Co., though just
how many remains to be seen.

For now, Alaska said it will take delivery of 39 737-800s through 2008.
Nine of those planes have yet to be ordered.

The airline already operates seven 737-200s that will be retired by the
middle of 2007. In addition, Alaska has 47 737- 400s, as well as 12
737-900s and 22 737-700s. The 737-700 and 737-900 are next-generation
models, as is the 737-800.

A new agreement with Boeing to speed up delivery of the 737-800s was a
"key element" in being able to get rid of the remaining MD-80s by the
end of 2008, the airline said. Another factor was $200 million that
Alaska raised through a stock sale in December to help pay for the
planes.

In all, Alaska has 43 Boeing 737s on firm order into 2011. It also has
options for 24 and purchase rights for 27 from 2009 and beyond.

The airline is likely to continue to convert some of those option and
purchase rights into firm orders from time to time.

"We will have great flexibility (with a single fleet type) to grow as
the market presents itself in 2009 and beyond," said Brad Tilden,
Alaska's chief financial officer.

Like other mainline U.S. carriers, Alaska has been looking for ways to
cut its costs after losing money the past two years. Switching to an
all-737 fleet is expected to save more than $115 million per year in
operating expenses once the transition is completed, Alaska said.

But the cost to make the switch will be $750 million. That includes the
costs of buying new 737s and training MD-80 pilots to fly the planes.
There are also costs associated with selling 15 of the MD-80s and
ending the leases on the other 11.

Once the last of those older MD-80 jets is gone, Alaska will have one
of the airline industry's newest fleets.

Alaska said it can essentially replace 26 of the McDonnell Douglas
planes, which seat 140 passengers, with 18 737-800s that seat 157
passengers.

The airline said its fleet will grow to 114 jets by the end of 2008, up
four planes from the start of 2006.

But the 737-800s will spend more hours flying each day than the MD-80s.
That's because the new jets will not need to spend as much time in
maintenance. The 737-800s will be used about 11 hours per day, compared
with fewer than 10 hours a day now for the MD-80.

Alaska said its decision to phase out its MD-80s has nothing to do with
safety, or with customers' perception of the McDonnell Douglas jet. It
is all about cost savings, Alaska said.

An Alaska MD-80 crashed off the Southern California coast in 2000 when
a control mechanism in the plane's tail failed. Everyone on the
Seattle-bound jet was killed.

BL.
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