Thursday, 26 March 2020

Alaska Airlines tries to conserve cash and announces more schedule reductions.

The flight schedules during April and May for Alaska Airlines will be reduced by around 70% the carrier has confirmed this week.  This is due because of the fall in demand related to the coronavirus COVID-19 outbreak spreading rapidly throughout the US and the world. 

The airline estimates that reductions will last for several months but will keep reevaluating the sit6uation and increase or reduce services upon demand. As a result of the outbreak, government leaders across the country have appropriately encouraged social distancing and discouraged or restricted travel. As a result, Alaska – like other airlines – is seeing demand reductions of more than 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 Alaska Airlines is taking to reduce spending and improve liquidity include:

Suspension of our cash dividend and previously announced the suspension of our share repurchase program.
Drawn down $400 million on line of credit and closed an additional secured loan for $425 million this week.
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.
 In addition to those, the Board of Directors voted to take reduce their cash retainers to zero through Sept. 30. asking employees who are interested in voluntary leaves of absence, under which Alaska would continue to pay both health and travel benefits.  Suspended annual pay increases, plan to reduce hours for management employees, releasing contractors and temporary workers.

The carrier is aggressively managing all spending, including all spending on aircraft, buildings, equipment, leases, services and other areas. They have said they are working with all vendor partners to reduce spending in line with our reduced flight schedule. 

"These actions are unprecedented, but these are truly unprecedented times," said Tilden. "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," said Tilden. "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."

The airline also recently reduced the level of inflight food and drink it would offer those few people still travelling. These reductions can vary based on flight length and destination and all subject to change.

Flights up to 250 miles:
No food or beverage service

Flights longer than 250 miles: 
Meals will not be offered in First Class.
Only water and a limited selection of canned sodas juices and beer will be served.
We will not serve hot beverages, orange juice, cocktails or wine.
No food will be served, other than a small packaged snack.
We are unable to fulfill any pre-orders that you have requested.

We recommend that you bring your own water bottle to #FillBeforeYouFly This indicates a link to an external site that may not follow the same accessibility or privacy policies as Alaska Airlines. By selecting a partner link you agree to share your data with these sites. after passing through the TSA checkpoint.
You may pack your own snacks to bring onboard or you may want to build in a little more time to pick up something at the airport. Most airport concessions are open and able to provide meals, snacks, and beverages to go.
We're also temporarily suspending inflight tablet rental/service, but our inflight entertainment library will still be available with over 600 free movies and TV shows to watch on your own device.
We know this can be a stressful time to travel, and we are doing everything possible to keep you safe. As always, the safety of our guests and our employees is our number one priority. We apologize for any inconvenience this may cause you during your trip.

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