Alaska Airlines executives expect business travel demand to return to only half of pre-pandemic levels by the end of the year, but they also expect gain market share during the recovery.
Following similar comments from executives at United Airlines and Delta Air Lines, Alaska executives in a call for results on Tuesday said they expected a recovery later this year, driven by “demand. substantial repressed ”on the leisure side. Conversations with their corporate clients, however, indicate that business travel is expected to be 50% of normal levels by the end of 2021, said Alaska Airlines Chairman Ben Minicucci, who will succeed CEO Brad Tilden at the end of the month. March.
Along with a successful vaccine rollout, due diligence considerations could also slow down companies’ return to travel, and companies will likely operate on tight budgets early in the recovery, said executive vice president and chief commercial officer Andrew Harrison. Business travel levels in the fourth quarter of 2020 were around 15% of their usual levels, according to Minicucci, a similar level reported by other U.S. carriers. Alaska has seen some growth in demand in certain segments where it has an advantage over other carriers – the fishing and petroleum industries in Alaska, for example – and small businesses “that do quite a bit of travel. “But big companies like Microsoft and Amazon are maintaining” strict no-move policies, “Harrison said.
In the meantime, however, Alaska’s sales teams are struggling to gain new customers, leveraging its new partnership with American Airlines and the upcoming entry into the Oneworld alliance.
“By working with America Airlines and Oneworld as a global partner, we see a very solid and strong interest in new contracts, in terms of network and utilities we can provide corporate contracts,” said Harrison. “We are very optimistic about the increase in the share of business travel.”
For the fourth quarter, Alaska passenger revenue fell 68% year-over-year to $ 657 million, and total operating revenue fell 64% to $ 808 million. The carrier’s average daily bookings have increased since being blocked in November, when cases of Covid-19 in the United States started to accelerate and local restrictions in several areas were tightened, Minicucci said. Even so, he expects the carrier to “stand still” until a significant portion of the population has been vaccinated.
This month Alaska also began the process of unlocking the middle seats, although that shouldn’t make a substantial difference given the low load factors at the moment, Minicucci said. Alaska will leave the middle seats stranded in premium cabins until May 31, not for security reasons, but as an added benefit for travelers booking premium cabins, especially since business travel remain on the decline, he said.
For the fourth quarter, Alaska recorded a net loss of $ 430 million, compared to net income of $ 181 million in the fourth quarter of 2019. For the full year, Alaska’s net loss was $ 1.3 billion.
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