Boeing CEO Bouyed by Alaska Airlines Sale

We are just days away from 2021, but already Boeing Co. CEO and President Stan Deal is feeling optimistic that the turn of the calendar will be tangibly meaningful and not a mere metaphorical event.

Deal told the Puget Sound Business Journal that Alaska Airlines’ purchase of 23 additional 737-9 MAX jets showed faith in the troubled aircraft as well as a vision for the future.

“We’re on the verge of recovery,” Deal told the weekly business paper.

Alaska’s new order builds on the carrier’s original order with Boeing and the deal revealed last month to acquire new 737-9s through lease. The latest agreement brings the airline’s total 737 MAX orders and options to 120 airplanes.

Boeing has suffered greatly in the last two years. The 737 MAX was grounded for almost 20 months after two crashes killed 346 people, the second one coming in March of 2019. In March of this year, the appearance of the coronavirus pandemic decimated the aviation industry. Boeing’s stock dropped from a high of $440 a share in February 2019 to $217.18 at the close of business on Christmas Eve last Thursday.

The additional MAX jets purchased by Alaska Airlines did come at a deep discount, however. In an interview with the Seattle Times, Alaska Air Group chief executive Brad Tilden said the airline will have to pay no additional money for the 13 Maxes it will take next year.

“This does not actually require any capital spending during 2021,” he said.

That’s because Alaska had already paid significant pre-delivery deposits on its pending orders of Maxes before the plane was grounded in March 2019. Boeing has now restructured the terms with discounts to compensate the airline and encourage the follow-on order.

“Boeing has been flexible in terms of the timing of payments and timing of deliveries should the recovery from the crisis not be what we expect,” Tilden said. “We are bullish. No airline would choose to play this hand we are playing right now. But if you have to play it, Alaska is probably better positioned than any other airline. We’re pleased to be standing side by side with Boeing.”