Alaska Airlines is pushing up its integration of Virgin
America into its passenger service system to early in the second quarter of
next year, CEO Brad Tilden said in the carrier's earnings call.
The migration, which Tilden called the "most
significant gating item" of its merger, will give Alaska more flexibility
in fleet management and begin converting the two carriers into a single brand.
Originally, Alaska had slated the migration for the end of next year, but the
team behind it has been able to shorten the timeline.
"We realized a few months ago just how all-consuming
the merger process would be, and we started to look for ways to accelerate the
integration so we can give the airline back to the divisional leaders earlier
and turn our full attention from the merger to running the best airline we can
possibly run," Tilden said. "This [integration] effectively allows us
to run Virgin America and Alaska as one airline and will provide a whole host
of operational and customer and financial benefits."
Unlike other recent mergers—such as American Airlines, which
had
to move US Airways flights from Shares to its Sabre reservations system in
2015—Alaska and Virgin both operate in Sabre already, though each in their own
partition. The process will bear some similarities to the
"drain-down" approach taken by American and others, in which Alaska
will cease selling tickets on Virgin stock after a certain date, so no
migration of tickets from one system to the other will be necessary after the
cutover, said revenue management and e-commerce VP Shane Tackett.
The exact timing is still to be determined, although Alaska
already is not selling tickets in the Virgin system beyond April 2018, he said.
"Our goal is to be ready ahead of the cutover event and
make this as much of a nonevent as possible," Tackett said. "If we do
this right, we'll show up with no technology problems at the airport."
Other integration milestones, including operating under a
single loyalty program and a single operating certificate, should be complete
by early next year, Tilden said.
During the second quarter, passenger revenue for the
combined Alaska/Virgin network increased 10 percent year over year to $1.8
billion. Corporate sales revenue was up 12 percent and was especially strong
out of Seattle and the California Bay Area, SVP of external relations Joseph
Sprague said.
Traffic for the combined network was up 7.8 percent, and
capacity increased 5.8 percent in the quarter. Load factor increased 1.6
percentage points to 86.8 percent.
Alaska EVP and chief commercial officer Andrew Harrison said
that 75 percent of the 20 new markets Alaska has added to its network over the past
nine months already are turning a profit. The carrier plans to add another 30
new markets over the next six months, he said.
Alaska reported a net income of $296 million for
the quarter, up from $260 million in the second quarter of 2016.