Alaska Airlines plans to cut as many as 3,000 workers from its workforce of 23,000 unless consumers return to the skies much more quickly than forecast.
Speaking to The Seattle Times, Alaska Air Group President Ben Minicucci blamed COVID-19 for what he predicts will be a smaller company in 2021:
“Things will likely not go back to pre-COVID levels in the next 12 months. 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.”
Alaska Airlines has been the recipient of nearly $1 billion in relief aid thanks to the CARES Act. In exchange, it cannot reduce its workforce prior to October 1, 2020. But after that date, cuts will begin. Already, 6,000 employees have taken voluntary leaves.
Cutting only 3,000 jobs seems rather conservative considering how much traffic has dropped. As Minicucci explained:
“It was like someone had their hand on a valve and just turned off the valve. We went from carrying 130,000 passengers a day to a trough of just 5,000 a day.”
Traffic is now back to about 24,000 passengers per day, but that’s still down over 80% and revenue is also down 80%. Even if traffic returns, Alaska predicts it will be concentrated in leisure travel, with more profitable business travel returning even more slowly. Revenue is predicted to be down 20-35% next year versus 2019.
Minicucci is taking a cautious approach to recovery, hoping for the best but planning for the worst:
“As we see demand improve and restrictions being lifted…if there’s an opportunity to grow, Alaska will grow. We’re trying to be optimistic, yet also brutally honest and realistic.”
That’s uncertainty is probably the most reasonable approach at this time…
image: Alaska Airlines