Alaska Air Group warned in a disclosure dated October 13 that capacity reductions are expected to continue into 2021 and that it had begun to “right-size” its workforce.
To mitigate potential furloughs, the Alaska Airlines (AS, Seattle Tacoma International) and Horizon Air (QX, Seattle Tacoma International) parent said it had initiated “early-out programs for all our frontline work groups” and had also offered extended incentive leave to pilots and aircraft mechanics. These schemes have been accepted by more than 4,000 employees, it added.
As a result, around 400 employees, primarily flight attendants, were placed on involuntary furlough from October 1, but “based on current capacity and network expectations, we anticipate recalling many of these employees by the end of the year,” the filing claimed.
Collectively, the early-out, incentive leave, and non-union management reductions will result in a one-time cost of about USD320 million, to be recorded in the group’s third-quarter results.
For October, Alaska Air Group forecasts that capacity will be about 45% lower and revenue around 65% lower year-on-year, with load factor hovering at 45% to 50%.
“At this time, our planning assumption is for our fourth-quarter capacity to be down approximately 40%,” it said.
“Our September cash burn was approximately USD117 million, which is higher than our August cash burn due to additional spend for incremental flying and increased debt service payments, offset by improved cash bookings. We expect October cash burn will be approximately USD125 million,” it concluded.
Meanwhile, in a blog post on its website dated October 12, Alaska Airlines revealed that on March 31, 2021, for the first time in its 88-year history, it will become a member of a global alliance, Oneworld. It will be the alliance’s fourteenth member airline. The date is about three months later than planned when the carrier was officially invited to join the alliance in July 2020, although in September it adjusted this to “sometime late Q1”.
