Alaska Airlines Reduces Capacity 8 Percent; Trims Work Force 9
Percent To 10 Percent
Alaska Airlines has announced that
it is reducing capacity 8 percent compared to a year ago, effective
with its winter schedule starting Nov. 9 and continuing into 2009.
The reduction in capacity (available seat miles) represents 15
percent fewer departures. As a result, Alaska Airlines is reducing
its work force by 9 percent to 10 percent.
"The one-two punch of record oil prices and a softening economy,
on top of increased competition, has burdened Alaska Air Group with
a $50 million loss on an adjusted basis for the first half of this
year. That demands decisive action to ensure the viability of our
company," said Bill Ayer, chairman and CEO of Alaska Air Group, the
parent company of Alaska Airlines and Horizon Air. "We are changing
our schedule to make sure we're flying the right routes with the
right frequency and right aircraft. Regrettably, a reduced schedule
means we need fewer employees."
Alaska Airlines, which operates a fleet of 111 Boeing 737s, is
trimming its schedule in four ways:
- Canceling low-demand flights on Saturdays and holidays.
- Reducing flights — typically one roundtrip a day —
in high-frequency markets, including Seattle-Bay Area and
Seattle-Southern California. However, the carrier will fly one more
daily Seattle-San Francisco and Seattle-Los Angeles roundtrip than
it did a year ago.
- Operating certain flights between Portland, Ore., and the Bay
Area with 70- to 76-seat Bombardier CRJ-700 regional jets and Q400
turboprops flown by Horizon Air instead of larger Boeing 737s flown
- Ending seasonal service on three Mexico routes, as previously
announced, between San Francisco and Cancún, Mazatlán
and Ixtapa/Zihuatanejo. Alaska Airlines continues to serve these
destinations nonstop from Los Angeles, and operates a daily
seasonal nonstop flight between Seattle and Cancún.
The carrier also ended service between Portland, Ore., and
Orlando, Fla., and between Vancouver, B.C., and San Francisco on
Aug. 24. Alaska Airlines continues to fly two daily roundtrips
between Seattle and Orlando.
Some of the capacity from these schedule changes is being
redeployed in new markets. Alaska Airlines announced last May it
will launch two daily flights between Seattle and Minneapolis/St.
Paul on Oct. 26 and one daily flight between Seattle and Kona,
Hawaii, on Nov. 17. Thrice-weekly seasonal service between
Anchorage, Alaska, and Kahului, Maui, will be offered Oct. 31
through April 25, 2009.
"Alaska Airlines will continue to be nimble in responding to
changing market conditions by trimming capacity from
underperforming routes and redeploying it where customer demand is
stronger," said Andrew Harrison, Alaska Air Group's managing
director of planning.
Work Force RIFs
The effect of a smaller schedule on Alaska Airlines' work force
includes a previously announced management headcount reduction of
80 positions. Slightly more than half the reduction, largely
completed in August, involved layoffs while the remainder was
achieved by eliminating open positions. The company announced today
that 850 to 1,000 "operational" positions also will be eliminated,
including pilots, flight attendants, aircraft technicians, and
reservations, customer service and ramp agents.
"We deeply regret having to take these steps and recognize the
hardship on these employees and their families," Ayer said. "This
difficult action is particularly frustrating because we've done
everything possible to avoid furloughs and our great people are the
reason Alaska Airlines is renowned for our customer service."
In response to the current environment, the company has
undertaken a variety of initiatives to improve profitability and
protect its cash balance. These measures include raising fares,
increasing fees and instituting a charge for a second checked bag,
taking steps to reduce fuel consumption, and deferring or
eliminating numerous projects and capital spending.
"These steps, when combined with the recently completed
transition to an all-Boeing 737 fleet, improve our viability, but
are not enough to eliminate the need to reduce the number of our
employees," Ayer said.
Alaska Airlines is working with the unions representing
operational employees to offer early-out programs and six-month to
two-year leaves of absence to minimize the number of involuntary
furloughs. Affected employees will leave the company starting in
November and continuing through early 2009.
Alaska Airlines' sister carrier, Horizon Air, expects to reduce
capacity in the fourth quarter by about 20 percent compared to the
same period last year, which would represent a 9 percent reduction
for all of 2008. So far, the effect on Horizon's work force
- A reduction of 75 management positions, in large part through
attrition and voluntary layoffs.
- A reduction of 94 pilot positions through attrition, early-out
packages and leaves, and a furlough of about 40 pilots this
In other work groups, furloughs are being minimized through
early-out programs, unpaid leaves and attrition.