In a tough quarter for airlines, Alaska Air ekes out a profit

by Dominic Gates, The Seattle Times

Updated: 19 minutes ago Published: 22 minutes ago

Despite a tough final month in 2021 when both the pandemic and the weather wrought havoc with airline operations, Alaska Air Group announced Thursday that it eked out a fourth-quarter net profit of $18 million, or 14 cents a share.

That compared to a net loss of $447 million, or $3.60 per share, in the same quarter of 2020.

Last month, the omicron coronavirus variant caused significant employee absences and then snow and ice hit Seattle-Tacoma International Airport the day after Christmas. The two factors combined to cause hundreds of flight cancellations.

Alaska Air Chief Executive Ben Minicucci, in a message to employees Thursday, called it “one of the most challenging holiday travel periods we have ever experienced.”

“Clearly, this was a tough way to end a year that otherwise had much to be celebrated,” he wrote. “We led the industry in profitability through the second half of 2021.”

For the full year, Alaska reported a net profit of $478 million, or $3.77 per share. However, this profit was possible during the pandemic because of the federal Payroll Support Program (PSP) that provided $914 million to the airline in the first half of 2021.

Without that support and other one-time items, Alaska would have reported a net loss of $256 million for the year.

[More than 200 airplanes in Southwest Alaska could have the problem that caused a Yute Commuter Service fire, investigators say]

from Dec. 26 through Jan. 12, Alaska Airlines canceled 1,670 flights.

On Jan. 6, facing an acute staff shortage resulting from COVID-related sick calls and a drop in demand as air travel contracted because of the risks from the omicron variant, the airline reduced its flight schedule by 10%. A week later, it cut the flight schedule a further 5% through the end of January.

In a statement Thursday, Minicucci said the airline has stabilized and is ready for significantly better times ahead as the threat from omicron ebbs.

“We have laid a solid foundation for our return to 100% of our pre-COVID flying by summer 2022 and we’re aimed to grow from there,” Minicucci said.

In an investor update Thursday, Alaska said January and February ticket bookings were down as a result of the omicron surge but “we have recently seen demand start to recover, with bookings strengthening for Presidents Day (Feb. 21) and beyond.”

Heavy losses among major US airlines

Alaska joins Southwest as the only major US airlines reporting a profit for the fourth quarter.

On Thursday, Southwest said it made a fourth-quarter profit of $68 million.

For the full year, Southwest reported a profit of $977 million. However, without $2.96 billion from the federal PSP and other one-time items, that would have been a $1.3 billion loss.

Earlier this month, Delta reported a fourth-quarter loss of $395 million, United a loss of $646 million and American a loss of $931 million.

For the full year of 2021, including federal PSP funding, Delta reported a profit of $398 million, while United and American each reported a net loss of $2 billion.

Alaska also announced Thursday that employees will receive 6.25% of annual pay as a bonus in their Feb. 4 pay checks.

The company said that works out to $3,000 for an employee making $48,000 per year.

That annual performance bonus, which is awarded based not only on financial targets but on safety and sustainability goals, is in addition to monthly operational performance bonuses, which paid about $1,000 per person throughout 2021.

Alaska reported revenue of $1.9 billion in the fourth quarter, up from $808 million a year ago.

Excluding PSP funding, Alaska generated $138 million in cash flow from operations.

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