Summary.
In early 2020 the pandemic plunged the airline industry into crisis, as passenger traffic on U.S. carriers plummeted 96% on a year-over-year basis. Like many of its peers, Alaska Airlines responded by quickly moving to stabilize its finances. It implemented a hiring freeze, cut senior managers’ salaries, renegotiated payment terms with vendors, suspended stock repurchases and dividend payments, and reduced capital spending. But the company also did something that set it apart. As competitors canceled airplane orders, Alaska Airlines’ leaders spotted an opportunity to update and expand the company’s fleet at attractive prices while streamlining operations by shifting from a mix of Airbus and Boeing aircraft to only Boeing. Confident that its balance sheet was strong, the company announced in December 2020 that it had agreed to buy 68 Boeing planes, with an option to buy 52 more. It was the only major U.S. airline to place a large aircraft order that year. “We wanted to be aggressive to enable our recovery coming out of the huge challenges of the pandemic,” then-president and current CEO Ben Minicucci explains. “We knew supply chain issues would hamper airplane deliveries, but this deal would put us first in line and set us up nicely to expand.” After all, “you can’t grow in this business without airplanes.”