How Alaska Air plans to go bigger: new jets, frequent flyer rewards and more

Despite recent schedule cuts as omicron cases surged and the soaring cost of jet fuel that’s raising airplane ticket prices, Alaska Air executives are touting optimistic plans for accelerated growth as the airline industry emerges from pandemic travel restrictions.

In presentations to Wall Street on Thursday at its annual investor day in New York, management said the goal is to expand the fleet from 300 to 400 airplanes by 2025 and increase annual revenue by $400 million within the next five years.

Part of that revenue bump will come from adding seats, not only by bringing in 100 new airplanes but by replacing smaller planes with larger jets. Alaska said it will accelerate by six months the retirement of its 150-seat Airbus A320ceos, replacing them with 178-seat Boeing 737 MAX 9s and MAX 10s that will have about 190 seats.

Shane Tackett, Alaska’s chief financial officer, said the Airbus A320ceos will be gone by the first quarter of next year.

Alaska will still retain its 10 larger A321neo aircraft. Those are leased through 2030, although Tackett said, “our goal is to find a new home for them as fast as we can.”

And Joe Sprague, president of Alaska’s sister carrier, Horizon, said the smaller airline hopes to phase out its 32 Q400 turboprops and transition to a single fleet of Embraer E175 regional jets by the end of next year.

Since Alaska will take delivery of only nine new E175s by summer 2023, that likely means the Horizon fleet size will initially shrink until more E175s are added.

Alaska said it is also expanding the rewards on its loyalty credit card, allowing holders to earn more frequent flyer miles on various purchases.

Management also points to a total of $2.3 billion in planned investments in airport infrastructure improvements at its hubs in Seattle, Portland, San Francisco and Los Angeles.

At Seattle-Tacoma International Airport, the plan is to renovate the main Alaska check-in lobby area over the next couple of years.

At the New York City investor event, a line of Alaska Airlines pilots stood with protest placards outside the venue — members of the airline’s pilots union drawing attention to the stalled negotiations over a new contract.