Alaska Airlines Deepens April & May Capacity Cuts to 80%

Alaska Air Group’s ALK subsidiary Alaska Airlines plans to reduce April and May capacity by 80% as the carrier continues to experience more than 80% decline in demand amid the coronavirus crisis. With the health hazard continuing unabated, the airline expects to make “sizeable cuts” in June and beyond as well. Previously, Alaska Airlines expected to lower capacity for April and May by 70%.

To cope with this deep crisis, the carrier took several cost-reduction initiatives, such as suspending dividends and buybacks, slashing officer pays through Sep 30, laying off contractors and temporary workers, reducing work time for management employees, freezing annual pay hikes and asking employees to show interest in taking leave of absence voluntarily.

The carrier also drew down $400 million on its line of credit and closed another secured loan for $425 million. It also reined in all other spending, such as on aircraft, buildings, equipment, leases etc.

Alaska Airlines along with other U.S. passenger airlines including the likes of American Airlines AAL, Delta Air Lines DAL and United Airlines UAL filed applications for the coronavirus relief grant.

With the global health emergency hitting airlines hard, shares of Alaska Air Group have plunged more than 58% since the beginning of February compared with the industry’s 57.5% decline.

Price Performance Since February

Zacks Rank

Alaska Air Group carries a Zacks Rank #3 (Hold).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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