Alaska Airlines Operates at 50% Capacity, Delays Oneworld Membership

posted on 11th September 2020 by Eddie Saunders
Alaska Airlines Operates at 50% Capacity, Delays Oneworld Membership

By Sofia Marrero,

Alaska Airlines (AS) has made public its capacity results during June-August. For September, it expects a fall of 50% in its capacity.

Despite the drop in operations, the forecast implies a lower downward trend than in previous months. The available seat miles (ASMs) were -68% by June, -63% by July, and -51% by August.

For August, the airline burned US$80m. However, it expects a September cash burn of approximately US$150m. The higher expenses are related to increased scheduled debt service payments and recently added capacity costs.

For September 8, Alaska Air Group had cash and short-term investments of approximately US$3.6bn. This balance includes its AS and Horizon Air (QX) businesses.

Other Performance Factors

The carrier emphasized that it is operating in a continually changing business environment with new emerging risk factors from time to time. As for the demand level, AS assumes it will remain consistent with August’s. These were about 1,245 in recorded revenue passenger miles (RPM), representing an increase compared to 887 in June and 1,137 in July.

The same August-September estimation will also apply for the passenger load factor (PLF). While the PLF was 46% in the first month, the airline expects a 40-45% PLF for September.

Delayed Oneworld Alliance Membership

Before the pandemic, AS had announced its plans to join Oneworld. Then, the official invitation to join finally came in June.

The membership process takes six to 12 months. Both AS Senior VP of Finance, Alliances and Treasury, Nathaniel Pieper, and Oneworld CEO Rob Gurney agreed to complete the process in record time.

However, AS President Ben Minicucci said that the expected process will occur sometime late Q1 next year, as reported by aviation writer Edward Russell.

Given the latest results, the airline’s focus for the remainder of 2020 will be to improve its balance sheet before increasing its network.

Oneworld Benefits Coming to Alaska Airlines

Being an alliance member, the airline can sell a global route map to corporate customers. To mention a few shared benefits, its passengers will access global lounges and extended reciprocal flyer miles. Additionally, it will have a better competitive position regarding other major US carriers such as Delta Air Lines (DL) and United Airlines (UA).