Alaska Air Group managed corporate revenue was up 30 percent year over year in the second quarter, and the segment is performing even better so far in July, Alaska chief commercial officer Andrew Harrison said on a Wednesday earnings call.
"We've been very excited about the results on the corporate side," Harrison said. "We talked about a 30 percent increase in revenues [for Q2]. Sitting in July, our revenues are up more than 40 percent [year over year] for managed corporate travel. The flywheel of growth and scale of our core hubs, our loyalty system and long-haul, especially out of Seattle, have really helped fuel the ability to win share and gain greater exposure to corporate traffic."
Harrison added that forward corporate bookings are up 37 percent year over year. He also called out Portland, Ore., and San Diego, noting that those cities' managed corporate share grew 5 points and 4 points, respectively, during the quarter "with Portland reaching a historic milestone, exceeding 50 percent share of managed corporate revenues."
In addition, the company's 9 percent year-over-year growth in Q2 Seattle managed corporate passenger volume outpaced systemwide growth, Harrison said, driven by new service to Europe and Asia.
Fuel Headwinds
Executives on the call noted elevated fuel prices as a challenge for the quarter.
Alaska's average fuel cost for Q2 was $4.43 per gallon, an increase of 85 percent year over year, which resulted in "$600 million of incremental fuel cost for the period," according to the carrier.
"While there was no way around the overwhelming fuel headwind, we saw an extremely positive earnings trajectory throughout the quarter, that only deepens our confidence in our long-term strategy," Alaska CEO Ben Minicucci said. "Unit revenues strengthened, unit costs improved, and we returned to profitability in June with a double-digit pre-tax margin despite fuel prices up nearly 70 percent year over year. Absent the fuel spike, this would have been a solidly profitable quarter."
Alaska president and CFO Shane Tackett noted that "while crude has remained volatile between $70 and $90 per barrel, refining margin volatility normalized throughout the quarter," he said. "We expect third-quarter fuel price per gallon of $3.75. This reflects expected July fuel costs of $3.60 per gallon and $3.80 per gallon for August and September."
Alaska Q2 Metrics
Alaska Air Group reported second-quarter passenger revenue of more than $3.6 billion, a 9 percent increase year over year. Total revenue was up 10 percent to nearly $4.1 billion on a capacity increase of 1 percent.
The company's second-quarter net loss was $76 million, compared with net income of $172 million a year prior.
Alaska plans to increase capacity in the third quarter 2 percent to 3 percent year over year.
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