For the better part of the past century, Alaska Airlines has focused on ferrying travelers across a relatively narrow slice of the US. It’s now thinking much bigger.
Alaska Air Group Inc., the owner of its namesake carrier and Hawaiian Airlines, is planning a global expansion starting with its first-ever flights from its Seattle base to Asia in 2025. The airline could expand to as many as 12 routes, including to destinations in Europe, over the next five years.
“We’re going to connect the west coast to the world and we’re going to do it now with the assets that we have that we didn’t have before,” Chief Executive Officer Ben Minicucci said.
The international expansion, which Minicucci revealed in an interview with Bloomberg and plans to detail at an investor meeting Tuesday, would push Alaska well beyond its current route network and put it into greater competition with larger rivals like Delta Air Lines Inc. and United Airlines Holdings Inc.
The effort, capitalizing on Alaska’s recent acquisition of Hawaiian’s parent company, will help push incremental profit growth to more than $1 billion from the combined airline and earnings of at least $10 a share by 2027. Alaska now expects $300 million in incremental revenue and $200 million in cost savings from its Hawaiian Holdings Inc. acquisition.
Alaska also said it expects 2025 earnings of at least $5.75 a share, exceeding the $5.58 average from analyst estimates compiled by Bloomberg. The carrier will expand flight capacity as much as 3% over 2024. Alaska also plans to repurchase about $250 million of its shares next year.
“Our long-term view is to create an international gateway out of Seattle and it’s going to benefit not only leisure customers, but corporate customers as well,” Minicucci said. “Europe is a natural place where people in the Pacific Northwest gravitate to, especially in the summer. So we’re going to look at points of interest in Europe and where our guests most likely want to go.”
The merged carrier would take advantage of existing transpacific routes already flown by Hawaiian from Honolulu to Tokyo and Seoul at the start.
Flights from Seattle to Tokyo’s Narita airportwill start in May, with service to Seoul beginning in October. Additional major international destinations for Hawaiian include other cities in Japan, along with Auckland, Sydney, Samoa and Tahiti. The carrier, which has pledged to retain both the Hawaiian and Alaska brands, will develop a separate livery, or fuselage paint, for the international flights.
The routes will be flown on Hawaiian’s Airbus SE A330 widebody aircraft initially and Alaska’s eventual fleet of 12 Boeing Co. 787 Dreamliners.
Much of its future growth will focus on international routes with an emphasis on premium products. The percentage of premium seats in the combined fleet will increase to 29% from 26% now, Minicucci said. Revenue generated from those seats will climb to approximately 45% from 37%, Chief Financial Officer Shane Tackett told Bloomberg.
The airline also plans to offer a new premium credit card aimed at global travelers that comes with its popular companion fare benefit, among other perks. Cardholders will get a free ticket, excluding taxes, on Alaska or any of its partner airline networks, once a year after an initial purchase.
“We’re going to have a similar concept to go globally, not only on our network, but onto our partner networks as well, which I don’t think anybody offers,” Tackett said. “It’ll have other features that are focused on global travel as well.”