Alaska Air Group, Inc. (ALK) announced the largest fleet order in its history, a landmark agreement with Boeing to purchase 110 new aircraft. The deal includes 105 Boeing 737-10 narrowbody jets and five Boeing 787 widebody aircraft, with purchase rights for an additional 35 737-10s. Financial terms were not disclosed, but the order significantly boosts Alaska's total Boeing order book to 245 aircraft, on top of the 94 Boeing 737 MAX jets already in its fleet.
The strategic agreement secures critical production slots with Boeing, extending Alaska's aircraft delivery stream through 2035. This provides long-term visibility in an industry grappling with supply chain constraints. The airline plans to grow its total fleet from 413 aircraft today to over 475 by 2030, and expects to operate more than 550 aircraft by 2035. The order is a mix of growth aircraft and replacements for older Boeing 737 models, aiming to maintain one of the industry's youngest and most fuel-efficient fleets.
The five Boeing 787 widebodies are central to Alaska's global expansion strategy, supporting its 'Alaska Accelerate' plan. By 2030, the airline aims to serve at least 12 long-haul international destinations across Europe and Asia from its Seattle hub. The order raises Alaska's firm 787 fleet to 17 aircraft. The company emphasized operational flexibility, retaining the option to adjust aircraft variants if market conditions change.
Despite the strategic significance, Alaska Air stock traded at $50.49, down 0.47%, and has underperformed the broader market. Year-to-date returns stand at 0.38%, trailing the S&P 500's 1.57%. Over the past year, ALK shares are down 22.94%, while the index gained 17.67%.
Concurrently, analysts are bullish on Boeing's stock (BA) following the order, viewing it as a key catalyst. Boeing's backlog has risen to 5,900 aircraft valued at over $636 billion. Wall Street's consensus price target for BA is $235, with some analysts, like Bernstein's Douglas Harned, targeting $277. Additional potential catalysts include anticipated increases in U.S. defense spending and possible new orders from Chinese airlines.
