During an earnings call, Alaska Airlines announced its plans to retire its remaining 10 Airbus A321s by September 2022 to expedite the delivery of its Boeing 737 Max 9.
According to Shane Tackett, the airline’s CFO, this decision is expected to help the airline become a single-fleet operator by 2024. However, this acceleration is anticipated to cost the carrier around $300 million to $350 million in exceptional fleet transition charges until the end of the year.
Alaska Airlines last Airbus A321s
Shane Tackett, CFO at Alaska Airlines, stated that the airline is in the final stages of talks with several parties. Further, including lessors, financial firms, and other airlines, regarding selling its 10 Airbus A321s.
The goal is to complete the transaction by the end of Q2. Tackett expressed confidence that the deal would be more financially viable than retaining the aircraft until the end of their lease terms. Furthermore, He added that the agreement is structured to yield a positive net present value and cash flow.
Alaska Airlines received six 737 Max 9 airplanes in the first quarter of 2023. Which increased the count of its 737-9 fleet to 43 units. The company also received two 737 Max 9s directly from the order book of Air Lease.
In January 2023, Alaska Airlines completed the retirement of its A320 and De Havilland of Canada Dash 8-400 fleets. Further, the carrier reported a GAAP net loss of $142 million in the first quarter of 2023, compared to a $143 million loss in the same period of 2022.
However, its total operating revenue increased by 31% year on year to $2.2 billion. While operating expenses grew by 27% to $2.4 billion.
The company anticipates that its capacity in Q2 2023 will rise by 6-9% compared to the same quarter last year. CASM ex-fuel is predicted to increase by 1-3%.
Financial Numbers
Shane Tackett, the chief financial officer of Alaska Airlines, noted that the year-over-year comparison of the first quarter benefited from $35 million of lease return costs rolling off, but this is not the case for the second quarter.
The airline’s total debt decreased by $96 million to $2.1 billion between 31 December 2022 and 31 March 2023. Which includes $268 million of current debt.
Between quarters, the total operating lease liabilities increased by $41 million to $1.7 billion. The company’s total debt amounted to $3.7 billion. While it held $2.4 billion in unrestricted cash and marketable securities as of 31 March 2023. Resulting in adjusted net debt of $1.3 billion.
In the first quarter, Alaska Airlines resumed its share repurchase program, purchasing $18 million of common stock. The company plans to repurchase at least $100 million worth of shares in 2023.
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