With much of the US airline industry seeking but not finding profitability, Alaska Air Group reports a second-quarter profit of $220 million as the carrier’s premium offerings set it apart from struggling discounters.
“It’s clear that premium airlines are rising above the rest of the industry,” chief executive Ben Minicucci said on 17 July. ”Alaska’s product and performance put us in that top tier, with a strong long-term outlook to grow and compete.”
The parent company of Seattle-based Alaska Airlines says its profits were down slightly from the $240 million it reported during the second quarter of last year. Alaska’s nearly 16% ajdusted pre-tax margin should “lead the industry” during the period, Minicucci says.
Alaska Air Group reports revenue of $2.9 billion during the three months ending 30 June, increasing 2% from the $2.84 billion it reported last year.
Passenger capacity as measured in available seat miles increased 6% over the prior-year period. Several US airlines have observed that the market has been flooded with a surplus of seats, pressuring on air fares.
That pressure has been felt especially acutely by airlines that operate low-cost models. Southwest Airlines and Spirit Airlines recently lowered their earnings expectations for the second quarter.
Major US carrier Delta Air Lines said during its recent earnings call that the oversupply of domestic capacity contributed to its 29% drop in year-on-year profit, though it still reported $1.3 billion of profits.
Chicago-headquartered United Airlines – which reported a second-quarter profit of $1.32 billion on 17 July – says it believes the capacity oversupply issue will hit an “inflection point” next month.
Alaska is forecasting 2-3% higher capacity as measured in available seat miles during the third quarter
The carrier took delivery of six Boeing 737 Max 9s and three Max 8s during the second quarter, ending the period with 70 Max 9s and four Max 8s in service. Regional subsidiary Horizon Air, meanwhile, took delivery of a single Embraer E175, bringing its fleet of the type to 44 aircraft.
Alaska Air Cargo took a second 737-800 Freighter and expanded its network with twice-weekly flights to Los Angeles.
In the background, Alaska’s proposal to acquire Honolulu-based Hawaiian Airlines for $1.9 billion remains under review by federal regulators.
The carriers recently requested the transfer of Hawaiian’s international route authority to potential parent company Alaska Air Group, a move aimed at providiing continuity to the carrier’s long-haul operations upon the deal’s closure.
