Alaska Airlines is risking losing more pilots if it doesn’t successfully and quickly complete negotiations with pilots union ALPA. Negotiations over additional benefits have reached an impasse since starting in October. The Seattle Times quotes ALPA that it is seeing “a marked increase in attrition” of pilots. Pilot attrition growing risk for Alaska Airlines.
Alaska’s management hardly touched the topic during its FY21 results webcast on January 27. CEO Ben Minicucci said the airline is hiring 3.000 new employees this year and all training lines are full. President Joe Sprague of regional subsidiary Horizon Air said that pilot attrition is in line with projections and pilots are being trained.
But Alaska faces a risk of being unable to source enough new pilots if it wants to ramp up capacity aggressively during the second half of the year. Other US airlines have reported in their results presentations in the past two weeks that they are actively recruiting new pilots, Delta even 100 to 120 per month. These recruitments already are having an effect on many regional partners. United said last week that it has had to suspend or reduce services to various local airports as it has no pilots to fly the aircraft.
Minicucci acknowledged that the labor market is very competitive right now, but he is confident that Alaska will meet its targets. The airline has paid staff 6.2 percent in bonuses on top of their annual pay last year to thank them for their efforts and hopefully keep them on.
Alaska reports $748 million profit
Alaska Airlines Group reported a $478 million net profit for 2021 compared to a $1.324 billion loss in 2020, making it the only US airline together with Southwest to end last year with black numbers. While the full-year pre-tax loss was $342 million, the airline recorded a $282 million adjusted pre-tax profit in HY2. Its operating profit was $685 million versus a $1.775 billion loss. Operating cash flow was positive and generated over $100 million for the year, meaning that Alaska has been able to repair its balance sheet. Total revenues were up by 73 percent to $6.176 billion, making 2021 “a year of significant recovery”, said President and CEO Ben Minicucci. The airline reported strong results in the third and second quarters.
A week with severe winter weather in the Northwest, the effects of Omicron on bookings, cancelations, and staffing disruptions impacted Alaska’s Q4 results by some $70 million, resulting in a small profit of $18 million (2020: $-447 million). Although is pre-tax margin was 3.5 percent lower, the carrier is happy with its adjusted pre-tax margin of 2.4 percent for the second half of 2021. The operating profit for Q4 was $39 million ($-595 million) and total revenues $1.899 billion ($808 million).
The carrier reduced its January capacity by ten percent and currently isn’t having staffing issues. Due to Omicron, bookings for January and February impact revenues by $160 million. Forward bookings have rebounded since early this month, making Minicucci optimistic about a strong recovery from March. March and the rest of 2022 should be profitable. Alaska plans to return to pre-Covid capacity from the summer and build from there towards plus two and six percent over 2019 levels, dependent on demand. Growth will mainly happen in the Northwest, where recovery has been slower than elsewhere in the US. But Alaska also plans to grow California again to 2019 levels after it took out a lot of capacity in the past two years.
The partnership with OneWorld will lead to more than 100 flights per week by its partner airlines between and West Coast and to Europe from this summer, including non-stop services by British Airways between Portland and London Heathrow and Finnair launching Helsinki-Seattle. Alaska expects to benefit from this extra international.
All remaining A320ceo’s to go before the end of 2023
Alaska will retire the remaining 27 Airbus A320ceo’s it inherited from the Virgin America take-over by the end of 2023, said Minicucci. Having already retired its ten A319ceo’s in 2020, this leaves ten A321neo’s, which have lease ends coming in 2030 with AerCap and Jackson Square. Although Minicucci said that Alaska will become a Boeing-only operator with firm orders for 93 MAX 9s plus 52 options, it isn’t clear how long the A321neo’s will stay in the fleet. Executive Vice President Finance, Shane Tackett, said “I wouldn’t be shocked if we held them for a while, and I wouldn’t be shocked if we were able to find a place for them to go.”
Alaska ended 2021 with $3.1 billion in liquidity, including cash and undrawn lines of credit. It repaid $112 million in debt during the fourth quarter, bringing total debt to $1.3 billion. Capital expenditures will be around $1.0 billion. The carrier has hedged 42 percent of its 2022 fuel costs, which soared by 77 percent to $1.3 billion last year.
Active as a journalist since 1987, with a background in newspapers, magazines, and a regional news station, Richard has been covering commercial aviation on a freelance basis since late 2016.
In 2022, he has gone full-time freelance. Richard has been contributing to AirInsight since December 2018. He is also writing for Airliner World and Aviation News. From January 2023, he will add a part-time role with Dutch website and magazine Luchtvaartnieuws. Twitter: @rschuur_aero.
They’re not CEO’s, they’re neo’s
Check your spelling.
You wrote A320ceo at least 3 times above
Alaska is indeed having staffing problems. Just ask a crew scheduler. Management lives in a little bubble of denial.
The writing of ceo’s instead of ceos is because we are not talking here of Chief Executive Officers but of something different: current engine option. That’s why we revert to them as A320ceo’s.
Alaska Airlines’ website, webcast and other sources confirm that the A320s are the older models, not A320neo’s. Only the ten remaining Airbus with Alaska are A321neo’s, as
is also explained in the report. I hope this answers your remarks.
A320ceo = Current Engine Option
A320neo = New Engine Option
A320 ceo stands for “current engine option.” Another way of saying they are not the newest Airbuses with LEAP or Pratt PurePower engines. Only aircraft with those engines would be referred to as an A320 neo for “new engine option.”
They’ll have to drop DCA or get AA to cover it if they dump the 321neo’s.
Other than WN, Alaska is the only significant carrier getting rid of the 321neo.
A requirement of taking Boeing money to acquire Virgin America?