Alaska Airlines Press Release (March 25, 2020 @ 5:20 pm)
ALASKA AIRLINES ANNOUNCES SCHEDULE REDUCTIONS AND OTHER CHANGES TO CONSERVE CASH
Alaska Airlines has announced schedule reductions of approximately 70% for April and May. These reductions have become necessary to the unprecedented falloff in demand due to the COVID-19 outbreak.
Flight schedules for June and beyond will be based on demand however, they are anticipating that substantial flight reductions will last for several months. With travel restrictions and social distancing, all airlines are seeing a demand reduction of up to 80%.
“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,” said Alaska CEO Brad Tilden. “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.”
Some of the actions being taken to reduce spending and improve liquidity are as follows:
- We are announcing today the suspension of our cash dividend and we have previously announced the suspension of our share repurchase program.
- We have drawn down $400 million on our line of credit and closed an additional secured loan for $425 million today.
- We are announcing officer pay reductions through Sept. 30 as follows:
- 100% pay reduction for both the CEO and President of Alaska Airlines;
- 50% for the President of Horizon Air;
- 30% for EVPs and SVPs; and
- 20% for VPs and MDs.
- Our Board of Directors have voted to take their own cash retainers to zero through Sept. 30.
- We are actively soliciting employees who are interested in voluntary leaves of absence, under which Alaska would continue to pay both health and travel benefits.
- We have suspended annual pay increases, plan to reduce hours for management employees, and will release contractors and temporary workers.
- We are aggressively managing all spending, including all spending for aircraft, buildings, equipment, leases, services and other areas. We will of course make all necessary investments in expense items to maintain the safety and integrity of our operation.
- We are working with all vendor partners to reduce spending in line with our reduced flight schedule.
Brad Tilden, CEO of Alaska Airlines had this to say:
“These actions are unprecedented, but these are truly unprecedented times. Alaska has been here for 88 years to serve our customers and communities and to provide good jobs for our people. It is imperative that we act swiftly and courageously to ensure that we’re here to continue our mission in the future.”
“We are ultimately optimistic about the future of our great airline. But it is clear that we are and will be under severe financial pressure for the foreseeable future and that is why these actions are essential.”
Here is a link to the Alaska Airlines Blog which details the cost-savings measures that are being implemented.
Final Thoughts
These are certainly unprecedented and uncertain times in the airline and travel industries. The current economic conditions for the airlines has eclipsed the September 11th grounding of all airlines in the United States. Alaska Airlines like its counterparts are waiting for financial assistance from Washington D.C.
There will be further updates to this story as they develop.
