By Benjamin Pham
Alaska’s Second Quarterly Report Show Smaller losses, Increased Revenue
Alaska Airlines recently held an earnings call and announced its second quarterly reports for 2021, citing a net income of $397 million compared to last year’s net loss of $214 million at the peak of the COVID-19 ordeal. Additionally, the airline posted a net loss for this year’s second quarter of $38 million excluding any outside factors or adjustments, compared to a net loss of $439 million in last year’s second quarter.
Operating cash flow for the second quarter of 2021 grew to $840 million, which includes wage offsets and funding from the U.S. federal government’s CARES act. Furthermore, without federal funding, the carrier reported an increase in the cash flow to be over $580 million, and Alaska attributed its rise in cash to an increase in advanced bookings and the surge in travel demand.
The airline witnessed a surge in operating revenues from $421 million in Q2 of 2020 to $1.527 billion in Q2 of 2021. Meanwhile, the airline’s costs and expenses rose from $709 million in Q2 of 2020 to $978 million for this year’s second quarter.
Alaska also attributes the profitability and growth to the announcement for the expansion of its aircraft in its mainline and regional fleets, in which Horizon Air – Alaska’s regional carrier – will receive nine Embraer E175s between 2022 and 2023, while eight new, regional aircraft will be delivered next year through the expanded partnership with Skywest Airlines. Meanwhile, the carrier plans to receive 13 Boeing 737-9 MAX in 2023 and 2024, after receiving its first earlier this year.
The airline’s route map expanded and will continue to grow as new services from Los Angeles and Seattle to Central America will begin this November, after being announced during this quarter. Seven new, domestic routes in the airline’s West Coast network commenced, providing a boost in the carrier’s connectivity.
After paying off roughly $570 million in debt, consisting of a loan from the Federal government under the CARES Act and other remaining balances, looking to the future, Alaska plans to prepare itself for sustainable flight operations. The Seattle-based carrier has outlined its strategy to include a five-part pathway to net-zero carbon emissions by 2040.
Alaska is depending on Boeing to assist in its initiative to use more fuel-efficient aircraft while saving time and carbon emissions. During the second quarter, the airline commenced its partnership with the prominent aircraft manufacturer to introduce the 737-9 ecoDemonstrator, which will complete flights tests, spanning five months.
The aircraft’s flight tests for Alaska will experiment with new technology that could assist the airline in reaching its goal of sustainable air travel. Ultimately, Alaska’s profitability is gradually climbing, despite continuing to experience losses from expenses. The airline is confident in its strategy to rebuild its network while operating sustainably to keep costs low. However, only time will tell whether they succeed in the post-Covid-19 world.