Alaska Airlines sees coronavirus as an opportunity to ‘rerack’ its route map
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Alaska Airlines is not sitting on its laurels waiting for travelers to come back amid the coronavirus pandemic, which its executives call the “biggest demand contraction” in the carrier’s history.
Instead, the Seattle-based carrier is moving forward on a number of major initiatives, including joining the Oneworld alliance and a “rerack” of its route map to places where it is strong, Alaska Air CEO Brad Tilden said during a second quarter earnings call on Thursday.
All of these come even as Alaska prepares to be around 20% smaller next summer than it was in 2019. Even looking ahead, the airline does not expect travel to fully recover for at least two years — or well into 2022.
The crisis “does give us a chance to rerack the route network,” Tilden said in response to questions on how Alaska plans to use the downturn. The shifts give the airline a chance to “build the network around what we do best.”
Since the pandemic began, Alaska has unveiled eight new routes from its Los Angeles (LAX) hub. Most are to destinations primarily in the West where it already has a strong presence — places like Bozeman, Montana (BZN), Eugene, Oregon (EUG), and Spokane, Washington (GEG).
However, no big sweeping overhauls are planned. Tilden noted the map shift back to markets along the West Coast was already in the works prior to the crisis.
Alaska is far from the only airline making changes to its map. Delta Air Lines has downgraded crew bases at its former Cincinnati (CVG) hub and JetBlue Airways will end service to its former West Coast base in Long Beach (LGB) in October. United Airlines executives have said that no hub is “sacred” as it tries to push through the crisis.
“There is a re-baselining of the nation’s [airline] networks,” said Alaska chief commercial officer Andrew Harrison on Thursday.
Alaska Airlines reports a $439mn net loss excluding special items in 2Q20.
— Edward Russell (@byerussell) July 23, 2020
Alaska lost $439 million before special items in the second quarter. Many of the airline’s core markets, including California and Seattle, were hit early by COVID-19, though infections in those locations had subsided before their current resurgence. As that unfolded, Alaska reduced its flying during the April-through-June to just about a quarter of what flew during the same period in 2019.
“We were on a really nice clip thru the July 4 weekend… but as the narrative changed and the headlines changed, I think every airline has seen softness in bookings for future travel,” said Tilden.
Tilden views consumer confidence as key to getting travelers back on planes. The airline requires all passengers 12 and older to wear masks onboard flights. It also has rolled out an intensive cleaning regime it calls Next Level Care in order to prevent the spread of COVID-19.
With the recovery in air travel seemingly stalled, Alaska is preparing to notify staff of possible furloughs on Aug. 1. Airline executives did not say how many notices they will send, but noted that under their current forecast the carrier needs around 7,000 fewer employees — or about 30% of its 23,000-strong workforce —by the end of the year.
American Airlines has warned 25,000 staff members of possible furloughs, United 36,000 employees and Delta more than 2,500 pilots. American and United are backing union-led efforts to extend employment protections under the federal government’s coronavirus aid package, or CARES Act, through March 2021.
In the quarter ahead, Alaska plans to fly about half of what it flew a year ago during July, August and September.
Featured image by Edward Russell/TPG.
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