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Alaska Airlines Makes Big Boeing 737 Max Order in First U.S. Sales Since Lifting of Flight Ban

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  • Alaska Airlines is upsizing its order for 737 Max planes by 23 and is leasing 13 more.
  • U.S. regulators last month cleared the planes to fly again after two deadly crashes.
  • The order is mostly aimed at replacing Airbus planes inherited from the 2016 merger with Virgin America.

Alaska Airlines has agreed to buy nearly two dozen additional Boeing 737 Max planes, the first order from a U.S. carrier since regulators cleared the planes to fly again last month after two deadly crashes.

Alaska said Tuesday it will buy 68 of the 737 Max 9 planes, up from the 32 it had previously ordered. Alaska will buy 23 of them from Boeing and lease 13 others from Air Lease. Alaska also announced options to buy 52 other Max planes.

The Federal Aviation Administration lifted its grounding order that was put in place after two nearly new Max jetliners crashed in 2018 and 2019, killing all 346 people aboard the flights.

Boeing has been struggling from the almost two-year grounding that was met with the coronavirus crisis, driving down demand — and prices — for its planes.

Alaska Airlines CEO Brad Tilden declined to disclose terms of the deal but told CNBC that nine of the Max jetliners it is buying are so-called white tails, planes that have been built but don't have an owner.

The order by Alaska, which is based in Seattle, near Boeing's Max production plant, will transition the carrier to a nearly all-Boeing fleet in coming years, a move Tilden says will save the company on maintenance and other costs, crucial as the carrier races to cut expenses due to depressed travel demand in the pandemic. Last week, Alaska forecast its December revenue and passenger traffic would be down as much as 70% from a year ago.

The airline's fleet is a mix of Boeing and Airbus jets stemming from its 2016 merger with Virgin America. Most of the Airbus jets will be replaced by the new Boeing planes.

"We said: What is it we can do to fundamentally and permanently take advantage of this crisis and improve the competitive position of Alaska?" said Tilden. "We said if we can largely get back to a single fleet, that would be in our interest."

The carrier is now starting to train its pilots, including those certified to fly the Airbus narrow bodies, on the Max. Tilden said the company has 830 of about 3,000 pilots trained on the Airbus, a number that will decline to about 145 by late summer 2023.

European budget airline Ryanair earlier this month announced an order for 75 Max jets to its 135-plane order, the largest order in two years.

Alaska plans to start flying the Max in the first quarter and receive its first Max jet in January and a total of 13 planes in 2021, followed by 30 in 2022, 13 in 2023 and 12 in 2024. It hadn't received any of the planes at the time of the March 2019 grounding.

American Airlines is scheduled to become the first U.S. airline to return the Max to commercial service, with initial routes between Miami and New York's LaGuardia on Dec. 29. United Airlines plans to start Max flights on Feb. 11 from its Houston and Denver hubs.

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