- Joe Breitfeller
Alaska Airlines Reports Second Quarter Net Loss of $214 million; Joins Oneworld Global Alliance
Alaska Airlines announced on Thursday a second quarter net loss of $214 million or $(1.73) per diluted share versus a net income of $262 million or $2.11 per diluted share for the second quarter of 2019. Separately, Oneworld announced the carrier will join their global alliance.
Today (July 23, 2020), Alaska Airlines announced a second quarter net loss of $214 million or $(1.73) per diluted share compared to a net income of $262 million or $2.11/share in the second quarter of 2019. Excluding the U.S. Cares Act Payroll Support Program (PSP) wage offsets, special items and mark-to market fuel hedge accounting adjustments, the carrier’s second quarter net loss was reported as $439 million or $(3.54) per diluted share. At the end of the second quarter, Alaska Airlines’ debt-to-capitalization ratio (including short-term borrowings) was 51 percent. The airline has reduced their cash burn by 70 percent from $400 million per month in March to $120 million in June. In Thursday’s announcement, Alaska Airlines Group’s CEO, Brad Tilden said,
“Airlines are currently navigating the biggest demand contraction in the history of aviation. The rest of the leadership team and I could not be more proud of how the people of Alaska and Horizon reacted quickly and decisively to adjust our operations and our business, and to help our guests feel safe when they fly with us. Being tested in moments like this reveals character, and I’m confident in our future because of the way our people are responding every day with grit, determination and perseverance. Those are the qualities that will carry our airline and our country through this crisis and beyond.”
During the second quarter, the company closed on an additional $164 million in secured financing, collateralized by seven aircraft, and held $2.8 billion in unrestricted cash and marketable securities. On July 2, 2020, Alaska Airlines obtained an additional $1.2 billion in financing through the issuance of an Enhanced Equipment Trust Certificate (EETC), secured by 42 Boeing and 19 Embraer aircraft, bolstering their liquidity position to $3.8 billion as of July 22, 2020. In April, the company and their Horizon Air subsidiary received $992 in payroll support program (PSP) funds under the U.S Cares Act. Additionally, the carrier’s McGee Services subsidiary reached an agreement for $30 million in PSP funds, of which $15 million had been received in June. Alaska Airlines has also signed a non-binding letter of intent with the U.S. Treasury to obtain loans of up to $1.1 billion under the U.S. Cares Act.
The airline has returned 43 mainline and all Horizon Air and SkyWest Airlines aircraft to service, while 89 mainline aircraft remain temporarily parked. In July, the company eliminated 300 management positions, initiated early-out programs and offered incentive leaves to pilots, as they work to mitigate furloughs.
In a separate announcement today, oneworld® announced that Alaska Airlines would become the alliance’s 14th member, after being elected as a member designate following approval by the oneworld Governing Board. The carrier announced their intention to become a oneworld member last February and has now received a formal invitation. When the integration process is completed by year’s end, Alaska Airlines, Horizon Air and regional partner SkyWest customers will be able to earn and redeem rewards on all oneworld member airlines and top-tier members will have access to over 650 lounges worldwide. In Thursday’s announcement, Alaska Airlines’ Chairman and CEO, Glenn Tilden said,
“We’re excited to become a member of oneworld, the industry’s premier alliance, and honored to receive this invitation. This milestone will improve connectivity and service for our guests throughout the West Coast and beyond. oneworld will open up a tremendous international network for our business and leisure travelers when they’re ready to start flying overseas again, in addition to greater connectivity around the U.S. through our network for international visitors. We’re eager to build deeper ties with the six oneworld members we already cooperate with, and looking forward to working with new partners that are some of the best airlines in the world.”
Alaska Airlines currently codeshares with oneworld members American Airlines, British Airways, Cathay Pacific, Finnair, Japan Airlines and Qantas, as well as oneworld connect partner Fiji Airways. The carrier adds 34 new North American destinations to the oneworld network, which will grow to over 1,000 destinations to over 170 countries and territories.
In trading Thursday afternoon, shares in Alaska Airlines Group, Inc. (NYSE: ALK) were 1.69 percent higher at $36.91/share (2:05 PM EDT).
Source(s): Alaska Airlines, oneworld®