Corp. demand up, but Alaska is scaling back capacity plans

Demand for business travel at Alaska Air Group continued to rise throughout the first quarter, including what EVP and Commercial Director Andrew Harrison called “a staggering increase” in such demand among large technology companies over the past two weeks. But other factors, including a shortage of pilots, have led the company to further cut year-round capacity forecasts below 2019 levels.

Alaska Airlines’ parent company, Alaska Air Group CEO Ben Minicucci, on Thursday during the company’s first-quarter earnings call pointed to “staffing levels” as a key driver of the company’s decision to downsize capacity growth plans. Alaska now plans for year-round capacity to be flat to fall 3 percent from 2019 levels, compared to an expected growth of 1 percent to 3 percent announced a month ago and an increase of 2 percent to 6 percent announced last year. quarter.

“We have hired 2,600 employees to date in 2022, with many of our workgroups evolving as we expected in terms of staffing plans,” Minicucci said. “But the throughput in our pilot training department did not live up to our plan at the end of the quarter, and our teams are now working to accelerate the throughput and get us back on track for the year.”

Minicucci said the company planned to hire 600 main pilots and a “few hundred” regional pilots. He also mentioned high fuel prices as well as plans to phase out all Airbus A320 aircraft in early 2023 and all A321 aircraft by the end of 2023.

“We have faced more operational disruptions than is acceptable as we scale back our business with the primary problem of staff level,” Minicucci said.

Like other airlines, Alaska executives said the airline has experienced a sharp return of business travel, especially in the last few weeks. Business travel reservations today are 30 percent below 2019 levels, Harrison said.

Demand for business travel from small and medium-sized businesses has returned to 2019 levels, Harrison said, but the recovery in larger technology companies has been recent and dramatic, he said.

“What I’ve literally seen in the last two weeks is a staggering increase in flight for the big technology companies,” he said. “Some of the big ones have come back in late March and early April, when their traffic was down 80 percent. Just last week, one of the largest high-tech companies was down only 25 percent. “

Results and forecasts

Alaska Air Group’s first-quarter passenger revenue rose 129 percent year-over-year to $ 1.51 billion. The company recorded a net loss of $ 143 million compared to a net loss of $ 131 million in the first quarter of 2021. Total revenue in the first quarter increased 111 percent year over year to $ 1.68 billion. Revenue in March exceeded 2019 levels for the first time since the pandemic began, according to the company.

Alaska expected second-quarter revenue to rise 5 percent to 8 percent from 2019 levels, with an estimated fuel cost per share. gallon at $ 3.25 to $ 3.30.

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