Alaska (ALA)

Alaska Air Group Inc. traces its roots back to 1932, when Mac McGee began flying a three-seat Stinson aircraft between Anchorage and Bristol Bay, Alaska. The name Alaska Airlines did not come until 1944, after the carrier had merged several times and become the largest airline in Alaska.

After deregulation of the airline industry in 1978, Alaska began expanding methodically up and down the West Coast. By 1985, it had formed Alaska Air Group, Inc., a Delaware holding company, that trades to this day under the symbol “ALK” on the New York Stock Exchange. A year later, the holding company acquired Horizon - then five years old and now the largest regional airline serving the Pacific Northwest.

By the end of the 80s, Alaska Air Group had tripled in size. Its fleet had increased five-fold and its route map included scheduled service to Mexico and Russia. By 2006, Horizon Air and Alaska Airlines carried approximately 3.5% of all U.S. domestic passenger traffic. While not among the top 10 carriers in terms of passenger traffic, Alaska Air Group’s airlines dominate the Pacific Northwest and Alaska markets and are major players along the West Coast.

Reaching south and east from Seattle

As the mainline, Alaska Air has focused on providing air service to Alaska, to cities on the West Coast and between its Seattle hub and eight East Coast cities. In 2006, west coast flights generated 45 percent of traffic, routes within Alaska and between Alaska and the U.S. mainland 20 percent, Mexico 11 percent, Canada 4 percent and other markets including transcontinental and mountain region flights 20 percent.

Based on passenger boardings, its leading airports were Seattle, Los Angeles, Anchorage and Portland, Ore. Its leading non-stop routes are Anchorage-Seattle, Los Angeles-Seattle and San Diego-Seattle. In September 2007, Alaska Airlines is scheduled to launch its first daily, nonstop service between its growing hub at Portland International Airport and the East Coast with flights to Orlando and Boston.

Transition to all-737 fleet; Horizon pulls Rjets from Fronter

In 2006, Alaska announced it would sell off its 18 MD-80s and transition to an all-737 fleet. The airline expects to grow capacity faster than the industry by replacing those with 737-800s rather than significantly increasing the number of aircraft it flies. As of Dec. 31, 2006, Alaska Airlines owned 70 aircraft and leased 44 with an average age of 9.1 years.

Horizon Air serves 40 cities in seven states and six cities in Canada under its own brand. In January 2007, it pulled nine 70-seat Bombardier CRJ-700s – representing 23 percent of its capacity - out of a regional jet service agreement with Denver low-cost carrier Frontier Airlines and shifted them to serve the Alaska Air Group network.

Horizon Air operated 69 aircraft at the end of 2006, including 28 Bombardier Q200s, 20 Q400s and 21 CRJ 700s.  The company was named the 2007 Regional Airlines of the Year by Air Transport World.

An island of relative stability

Alaska Air Group has been an island of relative stability in an industry that has jettisoned hundreds of aircraft and thousands of pilots in the wake of the Sept. 11, 2001 terrorist attacks, rising fuel costs and low-cost competition. From 2002 to 2006, it was able to increase its revenues nearly 50 percent to $3.3 billion. It lost money in four of those five years for a net loss of $184 million, but it never furloughed a single pilot during that period and it has emerged with some of the lowest costs among major airlines.  

Alaska Airlines' passenger traffic, as measured by revenue passenger miles, or RPMs, increased 5.48 percent in 2006 on a 4.4 percent rise in capacity as measured by available seat miles, or ASMs. That boosted the airline’s load factor slightly to 76.6 percent. That compares to averages of 2.1 percent in RPMs, .3 percent in ASMs and a 79.8 percent load factor for the 11 passenger airlines tracked by FLTops.com. To view chart, click here. 

Net income for the second quarter ended June 30, 2007 dropped to $46.1 million from $55.5 million in the second quarter of 2006, primarily because of a rising fuel costs. FLTops.com members can view a five-year financial history of Alaska Air Group by visiting the airline profit and loss page.

Pilot contract negotiations ongoing

The airline said its cost per available seat mile, or CASM, was 11.9 cents in the first quarter of 2007, giving it the lowest cost of seven network carriers ranked by the Bureau of Transportation Statistics. Still, fuel prices, which have risen from 17 to 27 percent of Alaska Air’s expenses since 2004, have forced employees to make sacrifices.

In May 2005, as the airline was seeking $100 million in cost savings from its pilots, an arbitrator overseeing contract talks ruled pilots give up a combination of benefits, pay and work rules to secure a new contract. In some cases, pilots took pay cuts of 34 percent.

That contract became amendable May 1, 2007, but as of August, the Air Line Pilots Association International (ALPA) had yet to reach an agreement. In April, the union said it had closed a third of 31 sections of the contract, but had not yet tackled the difficult issues of pay and benefits.

FLTops members can review recent hiring activity at Alaska Airlines by visiting the “Major Airlines” section of our “Pilot Hiring”  chart.