Alaska Air Group's third-quarter corporate travel volume remained flat from the second quarter at about 75 percent to 80 percent recovered versus the same period in 2019, “while revenue is approximately 10 points better than this given the yield environment,” Alaska EVP and chief commercial officer Andrew Harrison said during a Thursday earnings call.
Still, while some corporate clients have been slower to return to travel, Alaska—not unlike United Airlines, which said similarly during its third-quarter call Wednesday—believes it is benefitting from “employees of these companies taking more personal and hybrid travel as they move around and work remotely,” Harrison said.
He also cited “improved share gap” from 2019 levels through corporate distribution channels because of partnerships with American Express Global Business Travel, American Airlines and the Oneworld airline alliance, and Harrison “fully expects we can restore 100 percent of our business revenue.”
Another of Alaska’s priorities is its transition to a single fleet. All Airbus A320 and Bombardier Q400 aircraft will be out of the fleet by January 2023, and the 10 A321s will follow by the end of 2023, Alaska CEO Ben Minicucci said. “Today we have 35 [Boeing] Max aircraft that are 25 percent more fuel-efficient per seat than the smaller A320s they are replacing,” he said. “We expect to have 78 Max aircraft by the end of next year, representing more than 30 percent of our mainline fleet.”
Q3 Metrics and Guidance
Alaska reported third-quarter operating revenue of $2.83 billion, the highest recorded quarterly revenue in company history, and up 18 percent from the third quarter of 2019 on 7 percent less capacity, Harrison said. Passenger revenue for the quarter increased 47 percent year over year to $2.62 billion. Net income was $40 million versus $194 million in Q3 2021. Third-quarter fuel costs increased 133 percent to $877 million from $376 million from a year prior.
The company projected fourth-quarter capacity to be down 7 percent to 10 percent from Q4 2019 and down 8 percent to 9 percent for the full year. Fourth-quarter total revenue is anticipated to be up 12 percent to 15 percent over 2019 levels. The fuel cost per gallon is expected to be between $3.50 and $3.70 for the fourth quarter.
During the third quarter, Alaska signed an agreement with sustainable aviation fuel producer Gevo for 185 million gallons of SAF over five years. In addition, the company has ratified three major labor contracts, including one this week with its mainline pilot group, Minicucci said.
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