n7371f
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Alaska tells pilots it will post loss

Tue Mar 13, 2018 4:48 am

I'm told Alaska's second in command, Ben Minicucci, sent an e-mail to pilots that informed of the airline's upcoming first quarterly loss in 7 years due to increased competition and higher costs. AAG is also pulling back on pilot training, which could be taken as a cut in expansion, which include shelving plans for classes until the fall (assuming that happens).

Mergers are tough. Even Delta went through a few rough quarters with the Northwest integration, although that has to be understood with the financial performance climate at the time.

This is not good news. Coupled with the announced cuts at SFO, supposedly the epi-center of the "new" Alaska, more pressure will mount on the current AS management team to figure its crap out. The good news for them is the heavily NW/Seattle centered BoD will be hesitant make any changes because of the whole love the home market mentality.

Will this merger end up being American buying AirCal or RenoAir with AS merely taking out a competitor? Right now it's not going well...and losing money in today's environment is simply not acceptable to Wall Street.
 
Varsity1
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 4:59 am

It's not the doom and gloom it's reported to be. AS is taking some special charges in the 1st quarter so the peak summer financial performance can get back to normal.
"PPRuNe will no longer allow discussions regarding Etihad Airlines, its employees, executives, agents, or other representatives. Such threads will be deleted." - ME3 thug airlines suing anyone who brings negative information public..
 
PlanesNTrains
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 5:02 am

Doom and gloom? Alaska Airlines? A.net? Perish the thought.

I think the non-big four will likely struggle moving forward in the face of these mega-airlines that we have today. Just the new normal.
-Dave


”Yet somewhere in Iceland a great anger stirred in the soul of a troubled individual...” - Revelation
 
wnflyguy
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 5:26 am

I can see this as giving AS the Wall Street wiggle room to shed any remaining unwanted VX stuff. Dumping the Airbus aircraft with it's unfavorable lease conditions.
Sale the restricted Slots at DCA and LGA.
Drawl down the low yielding DAL focus city by redeploying those aircraft to higher yields out of SFO and SJC.
Heck they could offer up Delta a deal take over our Airbus aircraft and we will throw in a DAL gate.

Flyguy
my post are my opinion only and not those of southwest airlines and or airtran airlines.
 
caflyboy
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 5:39 am

cue the AS/B6 merger discussion in 5,4,3,2.....
 
Corpsnerd09
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 5:48 am

caflyboy wrote:
cue the AS/B6 merger discussion in 5,4,3,2.....


You mean cue the "DL vs AS at SEA" dead horse... Again.
 
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EA CO AS
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 6:26 am

n7371f wrote:
This is not good news.


Oh heavens to Betsy, whatever will AS do? :faint:

Put away the fainting couch, Camille. While it's never good to see a quarterly loss, this was expected; AS is getting intense pricing pressure from DL in SEA, UA in SFO, and pretty much everybody in LAX. No one assumed a larger AS would be welcomed with open arms by their competitors, and this pricing pressure, coupled with high fuel costs, is taking a toll in Q1.

But that also means AS is "only" projecting to grow at just over 4% this year instead of the 6-8% annually it had been doing before the acquisition of VX. Full year pretax profits are still projected to be north of $1B. Advance bookings are strong.

AS isn't going anywhere, and they will continue to grow CA, especially SFO.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
Prost
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 6:51 am

From my perspective, the fundamentals at Alaska Airlines are very strong, even considering the merger. I agree with the post above that there may be some write offs that need to occur to make the books stronger, and 1Q 2018 may be the best time to do this. One poor quarter is not an a reason for DL or B6 to jump for joy, it sounds like it’s more of an accounting exercise.

Alaska will continue to be fierce competitor. May all do well.
 
AirFiero
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 7:06 am

wnflyguy wrote:
I can see this as giving AS the Wall Street wiggle room to shed any remaining unwanted VX stuff. Dumping the Airbus aircraft with it's unfavorable lease conditions.
Sale the restricted Slots at DCA and LGA.
Drawl down the low yielding DAL focus city by redeploying those aircraft to higher yields out of SFO and SJC.
Heck they could offer up Delta a deal take over our Airbus aircraft and we will throw in a DAL gate.

Flyguy


So what did AS get for its 2-something-billion?
 
rlwynn
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 7:15 am

Debt, planes they do not want and one less competitor.
I can drive faster than you
 
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 7:41 am

AirFiero wrote:
So what did AS get for its 2-something-billion?


o A trained, motivated, award-winning workforce
o A presence in CA that would have taken them at least 10 years, possibly 20, to grow organically
o Two gates at the hardest-to-come-by real estate in all of civil aviation (DAL)
o Gates and slots at JFK, LGA, and DCA they didn't previously have
o An order and delivery positions for 10 of the most sought-after aircraft on the market today (A321NEO)
o A fleet of over 50 Airbus aircraft with flexible lease terms to upsize or downsize as they see fit or market conditions dictate
o The ability to deny all of the above to a much more nimble, formidable competitor (B6)
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
CobaltScar
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 8:18 am

The AS shareholder got to absorb the costs of the 2 billion (plus debt) purchase before the eventual merge with B6. The only real winners were the Virgin share holders.

Swallowing this poison pill also increases the chances that more of B6 remains post-merger over AS.

I don't mean Virgin America itself was a poison pill, but just the jacked-up bloated price paid. I think this was deliberate strategy by B6 to destabilize AS and make the future merger terms more favorable to B6 management.
 
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 9:34 am

CobaltScar wrote:
I think this was deliberate strategy by B6 to destabilize AS and make the future merger terms more favorable to B6 management.


With respect, that’s insane.

Your theory assumes the B6 BOD authrorized bidding on VX not only in hopes they’d draw AS into a bidding war, but also running up the price and praying AS eventually kept outbidding them, so they themselves would eventually be a merger target someday?

There are so many assumptions here that the whole premise is laughable.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
CobaltScar
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 11:10 am

EA CO AS wrote:
CobaltScar wrote:
I think this was deliberate strategy by B6 to destabilize AS and make the future merger terms more favorable to B6 management.


With respect, that’s insane.

Your theory assumes the B6 BOD authrorized bidding on VX not only in hopes they’d draw AS into a bidding war, but also running up the price and praying AS eventually kept outbidding them, so they themselves would eventually be a merger target someday?

There are so many assumptions here that the whole premise is laughable.



Oh I'm sure they started bidding with the intentions of getting VX on the cheap, but walked away with a smile on their lips when they "lost" the bidding war north of 2 billion. Remember they announced a massive Mint expansion days later which has already born fruit and pushed AS out of some trans con routes. AS is back into a only slightly bigger corner than they were before with only one way out, the age old way of merger and acquisition. AS gets to digest the ugly meal that was VX and AS share holders get to pick up that tab. B6 will welcome the new AS with a little more meat on its bones in a few short years.

3D chess.
 
frmrCapCadet
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 2:38 pm

I doubt that they walked a way with a smile. VX was just as much their plan for expansion as it was AKs. Their business plan has had to be completely redone, and they are experiencing their share of strains on the East coast.

It would serve the flying public if the two airlines had a good interlining agreement for routes on which they don't compete. B6 smothers the east as AK does the far west, And each offers flights to major airports on the other coast and major mid continent airports. But even better they need a small regional to serve flyover country.

Their competition is the big three, and to a lesser degree WN.
Buffet: the airline business...has eaten up capital...like..no other (business)
 
XT6Wagon
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 2:48 pm

EA CO AS wrote:
AirFiero wrote:
So what did AS get for its 2-something-billion?


o A presence in CA that would have taken them at least 10 years, possibly 20, to grow organically


Sorry, but AS already had a huge presence in CA, they didn't need any help there. 2 Billion certainly could have been used to push hard against the other companies that were starting to pay attention to the west coast again.
 
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diverdave
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 3:14 pm

n7371f wrote:
I'm told Alaska's second in command, Ben Minicucci, sent an e-mail to pilots that informed of the airline's upcoming first quarterly loss in 7 years due to increased competition and higher costs.


If it's a loss due to writeoffs, that's expected and not a problem.

If it's an actual operating loss, that's not so good.
 
PlanesNTrains
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 3:44 pm

n7371f wrote:
I'm told Alaska's second in command, Ben Minicucci, sent an e-mail to pilots that informed of the airline's upcoming first quarterly loss in 7 years due to increased competition and higher costs. AAG is also pulling back on pilot training, which could be taken as a cut in expansion, which include shelving plans for classes until the fall (assuming that happens).

Mergers are tough. Even Delta went through a few rough quarters with the Northwest integration, although that has to be understood with the financial performance climate at the time.

This is not good news. Coupled with the announced cuts at SFO, supposedly the epi-center of the "new" Alaska, more pressure will mount on the current AS management team to figure its crap out. The good news for them is the heavily NW/Seattle centered BoD will be hesitant make any changes because of the whole love the home market mentality.

Will this merger end up being American buying AirCal or RenoAir with AS merely taking out a competitor? Right now it's not going well...and losing money in today's environment is simply not acceptable to Wall Street.


What a hot mess of a post. I give you credit for spinning as much anti-Alaska fodder into one thread as possible. Kudos. At least you’ve managed to once again unite the DL and B6 crowd - the enemy of my enemy is my friend and all that.

Cheers
-Dave


”Yet somewhere in Iceland a great anger stirred in the soul of a troubled individual...” - Revelation
 
VolvoBus
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 4:05 pm

Surprised nobody has come up with a link to something in the business press,as I would assume that the first public notification would be to NYSE,not a select group of employees.
 
sxf24
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 4:51 pm

VolvoBus wrote:
Surprised nobody has come up with a link to something in the business press,as I would assume that the first public notification would be to NYSE,not a select group of employees.


The lack of disclosure raises suspicion about the substance of the email as described. It is inappropriate, and potentially illegal, to disclose to pilots (or any other group) that there will be a loss in a quarter without telling investors.

AS did provide an investor update today that did not indicate a loss in the first quarter or a substantial reduction in 2018 capacity guidance. What it did disclose was a $20M nonoperating expense in the first quarter related to several non-recurring items.
 
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 5:47 pm

The disclosure of an expected loss for 1Q18 was made during the FY17/4Q17 earnings call.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
777Mech
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 6:05 pm

EA CO AS wrote:
AirFiero wrote:
So what did AS get for its 2-something-billion?


o A trained, motivated, award-winning workforce
o A presence in CA that would have taken them at least 10 years, possibly 20, to grow organically
o Two gates at the hardest-to-come-by real estate in all of civil aviation (DAL)
o Gates and slots at JFK, LGA, and DCA they didn't previously have
o An order and delivery positions for 10 of the most sought-after aircraft on the market today (A321NEO)
o A fleet of over 50 Airbus aircraft with flexible lease terms to upsize or downsize as they see fit or market conditions dictate
o The ability to deny all of the above to a much more nimble, formidable competitor (B6)


And they spent 2 BILLION on that? An airline that doesn't own any planes and was largely loss making? B6 didn't need or already has most of the bullets listed above, except for a decent presence in Califonia and the 2 gates at DAL, which VA had to use a dartboard to figure out what routes they were going to fly out of DAL.
 
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Super80Fan
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 6:09 pm

I think we're well past the time for the government to come in and split up United, Delta, and American. It's only fair to the rest of the airlines and the travelling public.
RIP McDonnell Douglas
 
HPRamper
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 6:15 pm

777Mech wrote:
EA CO AS wrote:
AirFiero wrote:
So what did AS get for its 2-something-billion?


o A trained, motivated, award-winning workforce
o A presence in CA that would have taken them at least 10 years, possibly 20, to grow organically
o Two gates at the hardest-to-come-by real estate in all of civil aviation (DAL)
o Gates and slots at JFK, LGA, and DCA they didn't previously have
o An order and delivery positions for 10 of the most sought-after aircraft on the market today (A321NEO)
o A fleet of over 50 Airbus aircraft with flexible lease terms to upsize or downsize as they see fit or market conditions dictate
o The ability to deny all of the above to a much more nimble, formidable competitor (B6)


And they spent 2 BILLION on that? An airline that doesn't own any planes and was largely loss making? B6 didn't need or already has most of the bullets listed above, except for a decent presence in Califonia and the 2 gates at DAL, which VA had to use a dartboard to figure out what routes they were going to fly out of DAL.

Surely you are aware that if B6 had acquired VX, AS would be in line to lose a lot more than 2 billion. It was worth that money to keep B6 off the West Coast alone - any other items were icing on the cake.
 
splitterz
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 6:22 pm

Super80Fan wrote:
I think we're well past the time for the government to come in and split up United, Delta, and American. It's only fair to the rest of the airlines and the travelling public.


Well don't cherry pick on the airline mergers then. Southwest too. AirTran merger should't have happened either.
 
cledaybuck
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 6:27 pm

EA CO AS wrote:
AirFiero wrote:
So what did AS get for its 2-something-billion?

o The ability to deny all of the above to a much more nimble, formidable competitor (B6)
Forget all the rest. This is the answer.
 
cledaybuck
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 6:29 pm

Super80Fan wrote:
I think we're well past the time for the government to come in and split up United, Delta, and American. It's only fair to the rest of the airlines and the travelling public.

Not fair? Aren't many (most?) of the other airlines making higher margins than UA, DL, and AA?
 
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Dieuwer
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 7:02 pm

Imminent MileagePlan devaluation??
 
UpNAWAy
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 7:44 pm

Stock is up $3 a share so Wall Street isn't worried.
 
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Stitch
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 7:50 pm

Super80Fan wrote:
I think we're well past the time for the government to come in and split up United, Delta, and American. It's only fair to the rest of the airlines and the travelling public.


They were the ones who approved these mergers in the first place.
 
scoping2008
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 9:22 pm

cledaybuck wrote:
EA CO AS wrote:
AirFiero wrote:
So what did AS get for its 2-something-billion?

o The ability to deny all of the above to a much more nimble, formidable competitor (B6)
Forget all the rest. This is the answer.



Funny, “nimble” and “formidable” are words that have been used to describe Alaska as well. We’ll see what happens with jetBlue when the unions take root, wages increase, and work rules change.
 
MAH4546
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 9:24 pm

wnflyguy wrote:
I can see this as giving AS the Wall Street wiggle room to shed any remaining unwanted VX stuff. Dumping the Airbus aircraft with it's unfavorable lease conditions.
Sale the restricted Slots at DCA and LGA.
Drawl down the low yielding DAL focus city by redeploying those aircraft to higher yields out of SFO and SJC.
Heck they could offer up Delta a deal take over our Airbus aircraft and we will throw in a DAL gate.

Flyguy


AS can’t offer DAL gates. It leases them from AA. It has no DAL gates to offer somebody.
a.
 
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 9:25 pm

scoping2008 wrote:
cledaybuck wrote:
EA CO AS wrote:
o The ability to deny all of the above to a much more nimble, formidable competitor (B6)
Forget all the rest. This is the answer.



Funny, “nimble” and “formidable” are words that have been used to describe Alaska as well. We’ll see what happens with jetBlue when the unions take root, wages increase, and work rules change.


I meant more nimble and formidable than VX had been.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
scoping2008
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 9:39 pm

EA CO AS wrote:
scoping2008 wrote:
cledaybuck wrote:
Forget all the rest. This is the answer.



Funny, “nimble” and “formidable” are words that have been used to describe Alaska as well. We’ll see what happens with jetBlue when the unions take root, wages increase, and work rules change.


I meant more nimble and formidable than VX had been.


Gotcha. My mistake.
 
n7371f
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 10:10 pm

This was expected?!?! I thought I studied the merger and all the SEC materials pretty good, along with all the public parties, and I don’t recall seeing anything about expectant quarterly losses. Maybe I missed something...wouldn’t be first time.

Yes Alaska isn’t going anywhere...as an entity.

But will they be going out of California as it pertains to the Virgin network? I’m more concerned with dropping business heavy trunk routes like SFO-DEN and SFO-ORD (down to 1 daily) than I am a quarterly loss. Alaska is supposed to be winning California, not retreating. That was the big sell of the merger after all.

EA CO AS wrote:
n7371f wrote:
This is not good news.


Oh heavens to Betsy, whatever will AS do? :faint:

Put away the fainting couch, Camille. While it's never good to see a quarterly loss, this was expected; AS is getting intense pricing pressure from DL in SEA, UA in SFO, and pretty much everybody in LAX. No one assumed a larger AS would be welcomed with open arms by their competitors, and this pricing pressure, coupled with high fuel costs, is taking a toll in Q1.

But that also means AS is "only" projecting to grow at just over 4% this year instead of the 6-8% annually it had been doing before the acquisition of VX. Full year pretax profits are still projected to be north of $1B. Advance bookings are strong.

AS isn't going anywhere, and they will continue to grow CA, especially SFO.
Last edited by n7371f on Tue Mar 13, 2018 10:12 pm, edited 1 time in total.
 
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millionsofmiles
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 10:13 pm

AS management getting the pilots ready for their next contract negotiations.
 
Varsity1
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 10:21 pm

millionsofmiles wrote:
AS management getting the pilots ready for their next contract negotiations.


Correct.
"PPRuNe will no longer allow discussions regarding Etihad Airlines, its employees, executives, agents, or other representatives. Such threads will be deleted." - ME3 thug airlines suing anyone who brings negative information public..
 
CobaltScar
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 10:50 pm

People say 2 billion, but by also assuming VX debt its more like 4 billion.
 
MIflyer12
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Re: Alaska tells pilots it will post loss

Tue Mar 13, 2018 10:53 pm

EA CO AS wrote:
The disclosure of an expected loss for 1Q18 was made during the FY17/4Q17 earnings call.


Could you point us to that, please?

I have looked at the SEC filings around that date and scanned the earnings call transcript and don't find it.
 
PlanesNTrains
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Re: Alaska tells pilots it will post loss

Wed Mar 14, 2018 1:12 am

n7371f wrote:
This was expected?!?! I thought I studied the merger and all the SEC materials pretty good, along with all the public parties, and I don’t recall seeing anything about expectant quarterly losses. Maybe I missed something...wouldn’t be first time.

Yes Alaska isn’t going anywhere...as an entity.

But will they be going out of California as it pertains to the Virgin network? I’m more concerned with dropping business heavy trunk routes like SFO-DEN and SFO-ORD (down to 1 daily) than I am a quarterly loss. Alaska is supposed to be winning California, not retreating. That was the big sell of the merger after all.

EA CO AS wrote:
n7371f wrote:
This is not good news.


Oh heavens to Betsy, whatever will AS do? :faint:

Put away the fainting couch, Camille. While it's never good to see a quarterly loss, this was expected; AS is getting intense pricing pressure from DL in SEA, UA in SFO, and pretty much everybody in LAX. No one assumed a larger AS would be welcomed with open arms by their competitors, and this pricing pressure, coupled with high fuel costs, is taking a toll in Q1.

But that also means AS is "only" projecting to grow at just over 4% this year instead of the 6-8% annually it had been doing before the acquisition of VX. Full year pretax profits are still projected to be north of $1B. Advance bookings are strong.

AS isn't going anywhere, and they will continue to grow CA, especially SFO.


I'm still trying to figure out why you care so much? And by "care", I mean "rattle on about".
-Dave


”Yet somewhere in Iceland a great anger stirred in the soul of a troubled individual...” - Revelation
 
gaystudpilot
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Re: Alaska tells pilots it will post loss

Wed Mar 14, 2018 1:38 am

1+1 will not equal 2 in this case.

By the time AS figures out how to profitably integrate desirable VX routes and assets and the dust settles, 1+1 will equal 1.2597. At that point B6 will enter to acquire AS for less than $2B.

Mark: 13MAR2018
 
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NameOmitted
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Re: Alaska tells pilots it will post loss

Wed Mar 14, 2018 2:19 am

gaystudpilot wrote:
At that point B6 will enter to acquire AS for less than $2B.


Perhaps my sarcasm meter is mis calibrated, but ALK had a different market cap of $8.4 billion.
 
AirFiero
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Re: Alaska tells pilots it will post loss

Wed Mar 14, 2018 2:44 am

CobaltScar wrote:
People say 2 billion, but by also assuming VX debt its more like 4 billion.


Any idea the net value of B6?
 
AirFiero
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Re: Alaska tells pilots it will post loss

Wed Mar 14, 2018 2:49 am

EA CO AS wrote:
AirFiero wrote:
So what did AS get for its 2-something-billion?


o A trained, motivated, award-winning workforce
o A presence in CA that would have taken them at least 10 years, possibly 20, to grow organically
o Two gates at the hardest-to-come-by real estate in all of civil aviation (DAL)
o Gates and slots at JFK, LGA, and DCA they didn't previously have
o An order and delivery positions for 10 of the most sought-after aircraft on the market today (A321NEO)
o A fleet of over 50 Airbus aircraft with flexible lease terms to upsize or downsize as they see fit or market conditions dictate
o The ability to deny all of the above to a much more nimble, formidable competitor (B6)


Dunno, seems like an AWFUL lot of money for a bunch of slots (which they reportedly don’t own at DAL) and a bunch of leases (planes they don’t own). Especially planes you don’t really want (Airbus). Plus an airline that is losing money and is carrying debt? Do you honestly believe it was worth what they paid?

It does seem like a better fit would have been B6/VX. But SFO seems too space-constrained and delay-plagued to be a place to start growing a hub, for anyone other than UA.
 
Austin787
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Re: Alaska tells pilots it will post loss

Wed Mar 14, 2018 3:38 am

AirFiero wrote:
So what did AS get for its 2-something-billion?


Eliminate a west coast competitor. Prevent JetBlue from expanding on the west coast. Bonuses for the executives.
 
n7371f
Topic Author
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Re: Alaska tells pilots it will post loss

Wed Mar 14, 2018 5:06 am

I'm sorry EA CO AS but you're disqualified for the line about 2 gates at Love Field being part of the greatest assets ALK acquired. I believe Virgin America doesn't own the leasehold on them. And second disqual for describing them as "hardest-to-come-by real estate". If you're referring to DAL wanting them yes, otherwise no one else is lined up to keep them from the LUV machine.

EA CO AS wrote:
AirFiero wrote:
So what did AS get for its 2-something-billion?


o A trained, motivated, award-winning workforce
o A presence in CA that would have taken them at least 10 years, possibly 20, to grow organically
o Two gates at the hardest-to-come-by real estate in all of civil aviation (DAL)
o Gates and slots at JFK, LGA, and DCA they didn't previously have
o An order and delivery positions for 10 of the most sought-after aircraft on the market today (A321NEO)
o A fleet of over 50 Airbus aircraft with flexible lease terms to upsize or downsize as they see fit or market conditions dictate
o The ability to deny all of the above to a much more nimble, formidable competitor (B6)
Last edited by n7371f on Wed Mar 14, 2018 5:11 am, edited 1 time in total.
 
n7371f
Topic Author
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Re: Alaska tells pilots it will post loss

Wed Mar 14, 2018 5:09 am

How's a quarterly loss in this marketplace acceptable? Listening...

PlanesNTrains wrote:
n7371f wrote:
I'm told Alaska's second in command, Ben Minicucci, sent an e-mail to pilots that informed of the airline's upcoming first quarterly loss in 7 years due to increased competition and higher costs. AAG is also pulling back on pilot training, which could be taken as a cut in expansion, which include shelving plans for classes until the fall (assuming that happens).

Mergers are tough. Even Delta went through a few rough quarters with the Northwest integration, although that has to be understood with the financial performance climate at the time.

This is not good news. Coupled with the announced cuts at SFO, supposedly the epi-center of the "new" Alaska, more pressure will mount on the current AS management team to figure its crap out. The good news for them is the heavily NW/Seattle centered BoD will be hesitant make any changes because of the whole love the home market mentality.

Will this merger end up being American buying AirCal or RenoAir with AS merely taking out a competitor? Right now it's not going well...and losing money in today's environment is simply not acceptable to Wall Street.


What a hot mess of a post. I give you credit for spinning as much anti-Alaska fodder into one thread as possible. Kudos. At least you’ve managed to once again unite the DL and B6 crowd - the enemy of my enemy is my friend and all that.

Cheers
 
n7371f
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Joined: Fri Jul 04, 2008 3:54 pm

Re: Alaska tells pilots it will post loss

Wed Mar 14, 2018 5:10 am

The eliminate a competitor - heck yes. Smart move by AS. Virgin A was a huge thorn in the side with undercutting yields. Was it worth the cost? Time will tell.

Austin787 wrote:
AirFiero wrote:
So what did AS get for its 2-something-billion?


Eliminate a west coast competitor. Prevent JetBlue from expanding on the west coast. Bonuses for the executives.
 
PlanesNTrains
Posts: 8624
Joined: Tue Feb 01, 2005 4:19 pm

Re: Alaska tells pilots it will post loss

Wed Mar 14, 2018 5:12 am

AirFiero wrote:
EA CO AS wrote:
AirFiero wrote:
So what did AS get for its 2-something-billion?


o A trained, motivated, award-winning workforce
o A presence in CA that would have taken them at least 10 years, possibly 20, to grow organically
o Two gates at the hardest-to-come-by real estate in all of civil aviation (DAL)
o Gates and slots at JFK, LGA, and DCA they didn't previously have
o An order and delivery positions for 10 of the most sought-after aircraft on the market today (A321NEO)
o A fleet of over 50 Airbus aircraft with flexible lease terms to upsize or downsize as they see fit or market conditions dictate
o The ability to deny all of the above to a much more nimble, formidable competitor (B6)


Dunno, seems like an AWFUL lot of money for a bunch of slots (which they reportedly don’t own at DAL) and a bunch of leases (planes they don’t own). Especially planes you don’t really want (Airbus). Plus an airline that is losing money and is carrying debt? Do you honestly believe it was worth what they paid?

It does seem like a better fit would have been B6/VX. But SFO seems too space-constrained and delay-plagued to be a place to start growing a hub, for anyone other than UA.


Just because a plane is leased doesn’t mean it isn’t valuable. You can’t make money flying people if you don’t have an airplane. Does it really matter if it’s leased vs debt?

The DAL gates may or may not be core to their purchase, but they are real estate no one else can get.

B6 and VX being a better fit might just be another clue why AS saw fit to do this deal.

SFO being gate-constrained is yet another reason why buying VX brings value to AS. In fact, it’s odd that nobody ever rattled on about VX’s limited footprint in SFO.

Ultimately, regardless of what you or I or anyone else on hear thinks, their BoD believed it was worth what they paid.
Last edited by PlanesNTrains on Wed Mar 14, 2018 5:14 am, edited 1 time in total.
-Dave


”Yet somewhere in Iceland a great anger stirred in the soul of a troubled individual...” - Revelation
 
PlanesNTrains
Posts: 8624
Joined: Tue Feb 01, 2005 4:19 pm

Re: Alaska tells pilots it will post loss

Wed Mar 14, 2018 5:14 am

n7371f wrote:
How's a quarterly loss in this marketplace acceptable? Listening...

PlanesNTrains wrote:
n7371f wrote:
I'm told Alaska's second in command, Ben Minicucci, sent an e-mail to pilots that informed of the airline's upcoming first quarterly loss in 7 years due to increased competition and higher costs. AAG is also pulling back on pilot training, which could be taken as a cut in expansion, which include shelving plans for classes until the fall (assuming that happens).

Mergers are tough. Even Delta went through a few rough quarters with the Northwest integration, although that has to be understood with the financial performance climate at the time.

This is not good news. Coupled with the announced cuts at SFO, supposedly the epi-center of the "new" Alaska, more pressure will mount on the current AS management team to figure its crap out. The good news for them is the heavily NW/Seattle centered BoD will be hesitant make any changes because of the whole love the home market mentality.

Will this merger end up being American buying AirCal or RenoAir with AS merely taking out a competitor? Right now it's not going well...and losing money in today's environment is simply not acceptable to Wall Street.


What a hot mess of a post. I give you credit for spinning as much anti-Alaska fodder into one thread as possible. Kudos. At least you’ve managed to once again unite the DL and B6 crowd - the enemy of my enemy is my friend and all that.

Cheers


Listening....??
-Dave


”Yet somewhere in Iceland a great anger stirred in the soul of a troubled individual...” - Revelation

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