Alaska: Corp. Travel Demand Recovering But ‘A Little Choppy’

Second-quarter business travel revenue at Alaska Air Group has fully recovered to 2019 levels, executives said during a Thursday earnings call, boosted by elevated fares. Business travel volume has reached about 75 percent to 80 percent of 2019 levels and the carrier expects further growth, said EVP and chief commercial officer Andrew Harrison, but described those volumes as “a little choppy.”

The company posted its highest-ever quarterly revenue in the second quarter, fueled by leisure volume that Harrison called “well above 2019 levels.” Harrison said he expected further business travel recovery, and noted both first-class and business-class revenue increased about 30 percent from the first quarter.

The technology industry, a key component of Alaska’s business travel volume given its West Coast prominence, has notably lagged in its volume, Alaska CEO Ben Minicucci said.

“Tech has probably been the weakest, just to be frank, given our network,” Minicucci said, adding that its preferred-partner status with American Express Global Business Travel and its alliance with American Airlineshave helped with business travel volume, “but the tech sector still has a ways to go to recover.”

Minicucci said Alaska is “hiring at a rapid pace and are consistently meeting our hiring goals,” but noted the challenge of pilot attrition at Alaska Airlines and regional subsidiaries Horizon and SkyWest.

Citing the staffing challenges and continuing supply chain disruptions, Minicucci said the company “will be more conservative in planning our operation and capacity until we see higher levels of stability and predictability.” Alaska’s third-quarter capacity will be 5 percent to 8 percent below 2019 levels, and full-year 2022 capacity will be 8 percent to 9 percent down.

Results and Forecasts

Alaska Air Group’s second-quarter passenger revenue increased 79 percent year over year to nearly $2.42 billion. The company reported net income of $139 million, down from $397 million one year prior. Total operating revenue increased 74 percent year over year to $2.66 billion. The carrier’s second-quarter fuel costs increased to about $776 million from $274 million the year prior.

The company projected a third-quarter increase in revenue of 16 percent to 19 percent from 2019 levels, with an estimated fuel cost of $3.79 to $3.89 per gallon.

RELATED: Alaska Air Group Q1 earnings

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