Alaska Airlines believes it will reach 100% of 2019 capacity by summer 2022

The carrier is seeing a surge in leisure demand, but business travel continues to be anemic. 

Seattle-based Alaska Airlines believes it will be operating 80% of pre-COVID-19 pandemic levels of capacity by this summer and will achieve 100% of 2019 flying levels by the 2022 summer “at the latest,” according to new CEO Ben Minicucci. 

During an April 22 conference call with analysts, Alaska Air Group executives expressed optimism that the 2021 first quarter marked a key turning point from the crisis atmosphere the company—which also counts regional Horizon Air in its holdings—had been operating under since mid-March 2020, when the COVID-19 pandemic hit the US hard.   

“This [first] quarter felt very much like a turning point from just trying to survive to once again being able to build our business,” CFO Shane Tackett said. 

In fact, according to MD-investor relations Emily Halverson, Alaska went from a $4 million per day cash burn in 2020 to $1 million per day in cash generation in March 2021. 

“It appears we have turned the corner in a number of key metrics,” Minicucci said. 

In the March quarter, Alaska took delivery of four 737-9 MAX aircraft and announced 12 new routes aimed at giving passengers greater connectivity to and from US west coast destinations.  

Like other US airlines, Alaska continues to struggle with business travel and is relying heavily on leisure routes. Alaska believes that business travel will ramp up to 50% of pre-pandemic levels by the end of this year.  

On the other hand, leisure demand is “coming back for us pretty much at 100%,” Minicucci said. “We probably will see a step change in business demand by the end of this year as the vaccines roll out and businesses relax their [traveling] restrictions.”  

An important milestone for Alaska will be the reopening of California, which has instituted some of the strictest COVID-19 rules in the US.  

The US’ most populous state was an important part of Alaska’s network prior to the crisis. According to Minicucci, pre-COVID-19 roughly 50% of the company’s traffic and revenue touched California. “Seeing the state reopen will be a powerful near-term enabler for our path back [to profitability],” he said, adding that 20% of Alaska’s capacity will touch California in the 2021 summer. 

Most of California’s statewide COVID-19 restrictions are expected to be lifted by mid-June.  

During the first quarter, Alaska posted a $131 million net loss as its revenue declined 51% year-over-year to $797 million.

Photo credit: Joe Pries