Alaska Airlines’ decision to extend leases on some Boeing 737-400s is paying off, allowing the company to add low-cost capacity in high-demand markets, chief financial officer Brandon Pedersen says on 3 March.
Pedersen, speaking to investors during the JP Morgan Aviation, Transportation and Industrials Conference, adds that lease rates on those aircraft are so low that the company has the option to park them for use as spares.
“This is an opportunity for us to put more chips on the table in a really low-risk way,” Pedersen says. “Pushing the lease returns into 2016 [allows us] to take advantage of some of that really inexpensive lift and send it into markets that really need more capacity.”
“Even if we decide that we don’t want to fly those [aircraft], at the rate we are getting per month, which is extraordinarily inexpensive, we could even use those as spares,” he adds.
Alaska announced in May 2014 that it would extend leases on some of its ageing 737-400s as part of its effort to boost capacity at Seattle Tacoma International airport by 11% by March 2015.
The carrier, which operates a fleet of 21 all-passenger 737-400s (plus a half dozen freighter and passenger-freighter -400s), has in recent months extended leases on about eight of those aircraft, according to the Ascend Fleets database.
Many of Alaska’s leases on the type now expire in mid-to-late 2016, and Pedersen says all of the -400s will be retired by the end of 2017.
As for now, the carrier continues to deploy the type on many of its routes from Anchorage to other Alaskan destinations and to its main hub of Seattle, according to FlightMaps Analytics.
The airline also deploys the type on routes from the Pacific Northwest to California cities like Los Angeles, Oakland, Ontario, Palm Springs, Sacramento, San Diego, San Jose and San Francisco, FlightMaps shows.
Source: Cirium Dashboard
