Alaska targets growth as others shrink

Washington DC
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Alaska Airlines plans revenue and capacity growth by about 6% this year, as capacity at other airlines remains flat or shrinks.

Growth will come from the introduction of new larger Boeing 737-900ER aircraft as well as the addition of up to five new markets, said Alaska Air Group chief financial officer Brandon Pedersen at the Bank of America Merrill Lynch transportation conference in Boston today.

Alaska will receive three 737-900ERs and one 737-800 from the manufacturer as well as two Bombardier Q400 turboprops for its Horizon Air subsidiary this year.

The airline inaugurated new service to Kansas City in March and will launch flights to Ft. Lauderdale and Philadelphia in June. However, it is dropping service to Miami when the Ft. Lauderdale service begins.

Delta president Ed Bastian said that the airline will reduce capacity by between 3% and 4% this year at the conference today. Southwest announced that it would keep its fleet numbers stable with a slight increase in capacity as it receives 737-800s this year during an investor event yesterday.

Brad Tilden, chief executive of Alaska, has said that he is targeting 4% to 8% annual capacity growth at the airline for the next few years.

Pedersen said that with the 6% revenue growth this year he expects to achieve a 1% cost reduction through improved productivity, reducing overhead costs and leveraging greater economies of scale.