Alaska Air happy to watch mergers from sidelines

WASHINGTON (Reuters) - Alaska Air Group (ALK.N: Quote, Profile, Research, Stock Buzz), parent of Alaska Airlines, intends to sit out any wave of mergers in the industry and instead focus on a plan that calls for 8 percent to 10 percent growth in capacity over the next few years, its chief executive said on Wednesday.

An $8.6 billion bid by US Airways Group Inc. (LCC.N: Quote, Profile, Research, Stock Buzz) for rival Delta Air Lines Inc. DALRQ.PK is seen as a possible trigger for more bidders joining the fray as well as other mergers in the airline industry.

But Seattle-based Alaska Air does not intend to join the fray or bid on any assets that are put up for sale if US Airways and Delta merge, Chief Executive William Ayer said at the Reuters Aerospace and Defense Summit in Washington.

"Historically, it has been a mixed bag as best in terms of the results of consolidation," Ayer said. "We are focused on our business and our transformation."

Alaska Airlines is in the midst of moving its fleet of aircraft to a single type, hoping to cut maintenance costs and improve fuel efficiency. It plans to retire 23 Boeing (BA.N: Quote, Profile, Research, Stock Buzz) MD-80 aircraft by the end of 2008, replacing them with 18 Boeing 737-800 aircraft, with a plan to buy up to 100 737s overall. Boeing no longer produces the MD-80 aircraft.

The company has already bought out five of its nine long-term leases for the MD-80 aircraft and is talking to two buyers on selling off the ones it owns, Ayer said. He declined to say by when the company hoped to do that.

Alaska Air will use the new aircraft to increase the frequency of flights and add new destinations, with a focus on strengthening its presence in the U.S. Pacific Northwest, he said. "We've got a lot of growth to existing destinations, connecting the dots and adding new destinations."

The transition to a single-fleet type is expected to save the company $118 million to $130 million a year, he said.

"This is a long-term transformation," Ayer said. "We think that an independent company is the right thing for us."