One or more embodiments relates to a method of producing an MCrAlY bond coat comprising an MCrAlY layer in contact with a Y—Al2O3 layer. The MCrAlY layer is comprised of a γ-M solid solution, a β-MAl intermetallic phase, and Y-type intermetallics. The Y—Al2O3 layer is comprised of Yttrium atoms coordinated with oxygen atoms comprising the Al2O3 lattice. The method comprises depositing an MCrAlY material on a substrate, applying an Y2O3 paste, and heating the substrate in a non-oxidizing atmosphere at a temperature between 400-1300° C. for a time sufficient to generate the Y—Al2O3 layer. Both the MCrAlY layer and the Y—Al2O3 layer have a substantial absence of Y2O3, YAG, and YAP phases.