Alaska Air Is Converting 2 More Boeing Jets Into Freighters. Here’s Why.

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Alaska Air

Group unveiled plans Thursday to convert two

Boeing

737-800 passenger jets into freighters in a bid to boost its cargo business.

The parent company of Alaska Airlines and Horizon Air Industries said the move would take its total freighter fleet to five, as it provided a long-term growth strategy update ahead of its investor day.

The global air cargo industry proved resilient during the height of the pandemic, generating $129 billion in 2020, approximately a third of airlines’ overall revenues, according to the International Air Transport Association. The organization also expects 2022 demand to exceed pre-crisis 2019 levels by 13%.

In goods news for Boeing (ticker: BA), Alaska Air (ALK) said it will share plans to accelerate its transition to using Boeing 737s for all its mainline operations and all Embraer E175 jets for regional routes by the end of 2023.

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The company also detailed its 2022 outlook, seeing capacity rising by 1% to 3%, in comparison to 2019 levels, and capital expenditure of $1.6 billion to $1.7 billion. It also sees costs per available seat mile rising 3% to 5% in the full-year from 2019 levels.

Further afield, the company expects to grow its network an average 4% to 8% per year through 2025, delivering $400 million of incremental revenue over the same period.

“Throughout our history, Alaska has consistently outperformed the industry, and we’re well positioned to continue that trend, leveraging loyalty, alliances, network growth and our brand to unlock significant value and deliver $400 million of incremental revenue as part of our 2025 strategic plan,” CEO Ben Minicucci said.

The stock rose 2% in premarket trading, and is close to 4% higher year-to-date, as of Wednesday’s close. The S&P 500 has lost 6.5% over the same period.

Write to Callum Keown at [email protected]