A Winter Chill is in the Air at Alaska Airlines

Alaska Airlines announced today it is reducing its capacity by 8 percent compared to a year ago, effective with its winter schedule starting Nov. 9 and continuing into 2009.

The reduction in capacity (available seat miles) represents 15 percent fewer departures. As a result, Alaska Airlines is reducing its work force by 9 to 10 percent.

“The one-two punch of record oil prices and a softening economy, on top of increased competition, has burdened Alaska Air Group with a $50 million loss on an adjusted basis for the first half of this year. That demands decisive action to ensure the viability of our company,” said Bill Ayer, chairman and CEO of Alaska Air Group, the parent company of Alaska Airlines and Horizon Air.

“We are changing our schedule to make sure we’re flying the right routes with the right frequency and right aircraft. Regrettably, a reduced schedule means we need fewer employees.”

Alaska Airlines, which operates a fleet of 111 Boeing 737s, is trimming its schedule by canceling low-demand flights on Saturdays and holidays, operating certain flights between Portland, Oregon and the Bay Area with 70- to 76-seat Bombardier CRJ-700 regional jets and Q400 turboprop flown by Horizon Air instead of larger Boeing 737s flown by Alaska and ending seasonal service on three Mexico routes, as previously announced, between San Francisco and Cancun, Mazatlan and Ixtapa/Zihuatanejo. 

Alaska Airlines continues to serve these destinations nonstop from Los Angeles, and operates a daily seasonal nonstop flight between Seattle and Cancun.

The carrier also ended service between Portland, Oregon and Orlando, Fla., and between Vancouver, B.C., and San Francisco on Aug. 24.

Some of the capacity from these schedule changes is being redeployed in new markets. Alaska Airlines announced last May it will launch two daily flights between Seattle and Minneapolis/St. Paul on Oct. 26 and one daily flight between Seattle and Kona, Hawaii, on Nov. 17. Thrice-weekly seasonal service between Anchorage, Alaska, and Kahului, Maui, will be offered Oct. 31 through April 25, 2009.

The company announced today that 850 to 1,000 “operational” positions also will be eliminated, including pilots, flight attendants, aircraft technicians, and reservations, customer service and ramp agents.

“We deeply regret having to take these steps and recognize the hardship on these employees and their families,” Ayer said. “This difficult action is particularly frustrating because we’ve done everything possible to avoid furloughs and our great people are the reason Alaska Airlines is renowned for our customer service.”

In response to the current environment, the company has undertaken a variety of initiatives to improve profitability and protect its cash balance. These measures include raising fares, increasing fees and instituting a charge for a second checked bag, taking steps to reduce fuel consumption, and deferring or eliminating numerous projects and capital spending.

“These steps, when combined with the recently completed transition to an all-Boeing 737 fleet, improve our viability, but are not enough to eliminate the need to reduce the number of our employees,” Ayer said.

By Karen Loftus