ALK Alaska Air Group Inc

   (FROM THE WALL STREET JOURNAL 4/5/16) 
   By Jon Ostrower 

Airline mergers have been a mixed blessing for Boeing Co.'s fortunes in the U.S., but the planned combination of Alaska Air Group Inc. and Virgin America Inc. could help it regain some lost ground.

A senior Alaska Air executive said Monday it will decide in the next two years whether to keep a mix of Boeing and Airbus Group SE jets, or drop the European plane maker.

Virgin America has an all-Airbus fleet of 63 planes, while Seattle-based Alaska is a longtime Boeing customer and operates 152 of the aircraft maker's 737 jetliners, in addition to 67 regional jets and turbopropsfrom other manufacturers. Airlines typically prefer to minimize the types of aircraft they fly to reduce maintenance and pilot-training costs. Plane makers, in the past, have used events such as mergers, periods of rapid expansion or renewal to try to flip carriers from one manufacturer to the other.

"We are big believers in single fleet [airlines], so much so that we bought another single fleet [airline]," said Alaska Air Chief Financial Officer Brandon Pedersen.

He added on an investor call that a decision on whether to keep the Airbus jets long term is "probably a couple years away," but it has flexibility to shift the enlarged airline back to being an almostall-Boeing operation for its largest jets.

Most of Virgin America's jets are leased from companies such as GE Capital Aviation Services, and 31 of the planes could be returned by 2021, according to an investor presentation. Virgin also has ordered 40 of the new Airbus A320neo jets, which have more fuel-efficient engines. Mr. Pedersen said there were "favorable cancellation provisions" for these planes, suggesting Alaska could drop the deals with few financial penalties.

Alaska has 37 Boeing 737 Max jets on order, which are expected to be added in 2018.

The mixed fleet created by an Alaska-Virgin America combination had been touted by analysts as one drawback of its bid in the face of strong interest from JetBlue Airways Corp., which mainly flies Airbus jets, a viewpoint acknowledged by Alaska executives.

Airbushas expanded its presence among U.S. carriers by targeting low-cost operators. "We will look forward todemonstrating the value and customer-friendliness of Airbus single-aisle aircraft to Alaska," said a spokesman for Airbus.

Boeing declined to comment.

(END) Dow Jones Newswires

April 05, 2016 02:47 ET (06:47 GMT)

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