Alaska Airlines Cancels 70% Of Flights, Cuts Costs

Filed Under: Alaska

Alaska Airlines has become the latest airline to announce significant schedule reductions and cost cutting measures, in light of the COVID-19 outbreak across the US and beyond.

Alaska cutting capacity by 70%

Alaska Airlines plans to cut capacity by 70% in April and May, in what the airline calls a “historic and unprecedented falloff in demand.” The airline has seen over an 80% reduction in demand in recent days.

The schedules for June and beyond will be based on demand, and it’s Alaska’s expectation that reductions will be substantial for at least the next several months.

As Alaska Airlines CEO Brad Tilden describes the current situation:

Alaska’s goal, since the onset of this outbreak, has been to keep our employees and guests safe and healthy, and to ensure that our airline is here to support and serve them in the future. But we also know that given the lack of demand for air travel and profound impact on the financial management of our business, hard work and aggressive control of costs and cash are required, even with additional support.”

Alaska Airlines announces cost cutting measures

Like most airlines, Alaska Airlines has announced some measures to reduce spending and improve liquidity:

  • Alaska is suspending cash dividends, after having previously announced suspension of their share repurchase program
  • Alaska has drawn down $400 million on their line of credit and closed an additional secured loan of $425 million
  • Alaska is soliciting employees who are interested in voluntary leave of absence, under which Alaska would continue to pay health and travel benefits
  • Alaska has suspended annual pay increases, plans to reduce hours for management employees, and will release contractors and temporary workers
  • Alaska is aggressively managing all spending, including for aircraft, buildings, equipment, leases, services, and other areas
  • Alaska is working with all vendor partners to reduce spending in line with reduced flight schedules

On top of that, Alaska is reducing pay for executives through September 30, 2020. The pay reductions will be as follows:

  • 100% for the CEO and President
  • 50% for the President of Horizon Air
  • 30% for EVPs and SVPs
  • 20% for VPs and MDs

Like other airlines, Alaska Airlines is also hoping to get a chunk of the potential $50 billion worth of government aid that may be coming to the airline industry shortly.

Bottom line

All airlines are suffering right now, and now Alaska Airlines is getting around to cutting capacity by 70% and also focusing on other cost cutting measures.

Interestingly up until this point Alaska’s capacity cuts have been pretty minor — just under two weeks ago the airline announced capacity cuts of 15%, but obviously that wasn’t nearly enough to address the current situation.

Comments
  1. I thought I would checkout Alaska for the first time for a flight from SAN/AUS for SXSW, obviously the event was cancelled. Alaska refused to waive the change fee so I lost out $150, where I heard Delta were offering a waiver.

    Ultimately it seemed that Alaska were much later than other airlines in offering a broader waiver, I’m not going to be in a rush to try flying them again sadly.

  2. I was on an Alaska flight a couple weeks ago sfo-jfk (before anyone gets angry, I’m medical staff getting to and fro the hospital I work at. Trust me, I’m not joyriding). It was maybe 30 people on the flight. And SFO was empty. At the gates there would be maybe 1-2 people sitting per row of chairs.

    I appreciated the gate agents making an announcement before boarding about how they’ve increased cleanings, and explained how their hepa filters clean the air while flying, etc. A lot of it I’m sure is SOP but I think it helps passengers be a little less anxious. During the flight the attendants maintained a positive, friendly attitude whatever their concerns for their own health were.

    Anyway, I wish them well. I started flying Alaska extensively about a year ago and they’re now my favorite domestic airline. I hope they survive all of this.

  3. AS still hasn’t cancelled our SAN-LIH tickets departing the 1st weekend in April.

    I second Lune’s sentiment. This is my favorite domestic airline as well and am hoping that they make it out of this intact.

  4. Pretty crazy to open flightradar24 these days. Filter by airline and check out Etihad and Emirates now. Just a few cargo planes flying around. I know they shut down but crazy to see it on flightradar24.

  5. I started a status challenge for MVP 75k status earlier this year and have to fly 20,000 miles by the end of April to maintain the status the rest of the year. I’m currently at 19,000 and grounded through May due to COVID-19. Any idea on how Alaska might handle this? I called them and they said lots of elites have called regarding status but they have made no decisions as of yet.

  6. This article doesn’t mention what they’re going to do to their Ramp/Fleet crews.

    I’ve been told that once the April 1st flight schedule comes out the ramp company that “Alaska owns but doesn’t consider Alaska” will be terminating all employees who have less than 6 months of experience with said company. Other employees will be furloughed to demand.

    If that’s to happen then there’s about to be hundreds of employee lay offs in the next few weeks alone. I know people who are gonna get put on the street because of this.

  7. Alaska is probably one of the best airlines as far as service, schedule and on-time departures and arrivals. I’ve also had the great opportunity to fly first several times, because the pricing between coach, premiere class and first aren’t all that different.

  8. Just got off a marathon 45 minute call to customer care rep and then supervisor. They were trying to charge me $375 for change fees adding segments to mileage tickets I had made for August. In the end they relented and waived my fees. This was only after I threatened to write letters and take other action. I had previously been told by a CSA that I could add segments and any change fees would be waived. I gave them the time and duration of that call as backup. It is getting rough out there but so far after canceling 15+ upcoming flight segments I have been perfect in paying zero change fees and other charges. Delta gave me my money back in several cases and vouchers in other cases. SW vouchers. AK air money back and no change fees. PAL money back. UA no change fees and full vouchers. I was able to cancel hotels via hotels.com, Hilton and Bonvoy with no change fees.

  9. I still think it’s possible American will merge with Alaska, though it’s too early to tell and no one has mentioned it yet. After all they were going to join the same alliance anyway… seems like now with the insane hit to air travel they may be better off merging. If it happens I just hope plenty of Alaska management stays on!

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