Alaska Airlines is planning to axe as many as 3,000 employees and the lay-offs are likely to start as soon as a near $1 billion federal stimulus cheque runs out at the end of September. Ben Minicucci, Alaska’s president said in a recent interview that the airline was preparing for a slow post-Corona recovery and expected the airline to shrink in the years ahead.
“Things will likely not go back to pre-COVID levels in the next 12 months,” Minicucci told the Seattle Times. “We see a smaller company in 2021. We see a smaller industry, in fact. We think we’ll be smaller by about 3,000 people,” he continued.
At the peak of the COVID-19 pandemic, as ‘stay at home’ orders across the United States decimated the demand for travel, Alaska Airlines says it hit “a trough” of handling just 5,000 passengers a day. In normal times, Alaska would fly as many as 130,000 every day.
Its home of Washington state was one of the first to experience a significant COVID-19 outbreak in the United States, while key markets like San Francisco became the first city to issue a sweeping stay at home order in April.
Since then, there have been green shoots of recovery starting to show. Passenger numbers are now up to around 24,000 a day but Minicucci cautions that revenue remains 80 per cent down on last year. Around 20 grounded aircraft will be brought back into service in the coming weeks and by August, capacity could have returned to as much as 50 per cent of pre-Corona levels.
Discounted leisure travel will help get bums on seats but revenue-driving business travellers might not return for some time. “We don’t see that coming back either in the fourth quarter or into next year,” he said of business travel as many companies extend their own travel bans and work from home initiatives.
Revenues could remain down by between 20 to 35 per cent well into 2021 according to Minicucci.
“We’re trying to be optimistic, yet also brutally honest and realistic,” Minicucci said of the possibility of job losses. Discussions are expected to start with unions in the coming weeks. Around 6,000 Alaska staffers have already taken voluntary unpaid leave options and there’s a possibility this might be extended in an attempt to avoid redundancies.
“We just have to see how demand comes back,” Minicucci concludes as efforts to cut costs continue. To put it in perspective, at the height of the crisis, Alaska was burning through $5.5 million a day.
