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EA CO AS
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Alaska Q2 2020 results

Thu Jul 23, 2020 6:44 pm

Source: https://investor.alaskaair.com/news-rel ... s-covid-19

o Reported net loss for the second quarter of 2020 under Generally Accepted Accounting Principles (GAAP) of $214 million, or $1.73 per diluted share, compared to net income of $262 million, or $2.11 per diluted share in the second quarter of 2019

o Reported net loss for the second quarter of 2020, excluding the payroll support program wage offsets, special items and mark-to-market fuel hedge accounting adjustments, of $439 million, or $3.54 per diluted share, compared to net income of $270 million or $2.17 per diluted share, in the second quarter of 2019.

o Lowered cash burn from an exit rate of $400 million per month in March to $120 million in June, a 70% reduction.

o Closed on an additional $164 million in secured financing in the second quarter, secured by seven aircraft.

o Held $2.8 billion in unrestricted cash and marketable securities as of June 30, 2020.

o Obtained nearly $1.2 billion in financing through the issuance of Enhanced Equipment Trust Certificates (EETC), secured by 42 Boeing and 19 Embraer aircraft, on July 2, 2020.

o Held $3.8 billion in cash and marketable securities as of July 22, 2020, including EETC funds received in July.

o Received $992 million in support for Alaska and Horizon under the Coronavirus Aid, Relief, and Economic Security (CARES) Act Payroll Support Program (PSP) in April 2020.

o Reached an agreement for McGee to receive $30 million in CARES Act PSP support, $15 million of which was received in June 2020.

o Signed a non-binding letter of intent with the U.S. Treasury to obtain up to $1.1 billion in additional CARES Act loans.

o Received official oneworld invitation on July 23, 2020. The company is working to accelerate the timeline and join the partnership by the end of 2020.

o Returned 43 mainline aircraft and all Horizon Air and SkyWest Airlines aircraft to service. As of July 22, 2020, 89 mainline aircraft remain temporarily parked.

o In July 2020, eliminated 300 management positions, initiated early-out programs for frontline workers and offered incentive leaves to pilots as we work to mitigate involuntary furloughs.


The management reductions were just completed last week and it was tough to see the names of so many valued people on those lists. I’m hopeful our new, leaner leadership team will continue to build on the legacy of those who are departing the company.

COVID, go away already!
"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
 
32andBelow
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Re: AS Q2 results

Thu Jul 23, 2020 6:55 pm

89 aircraft is pretty large percentage of Alaska’s fleet. are they mainly a319/20?
 
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Re: AS Q2 results

Thu Jul 23, 2020 7:05 pm

32andBelow wrote:
89 aircraft is pretty large percentage of Alaska’s fleet. are they mainly a319/20?


The A319s are gone and aren’t coming back. The parked storage is a mix of A320s and various B737NG variants. Capacity is only at about 55% of pre-COVID levels so the other airframes will take time to come back, with a projected summer 2021 size of 80% of pre-COVID levels. This could be higher or lower depending on demand though.
"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
 
tphuang
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Re: AS Q2 results

Thu Jul 23, 2020 7:14 pm

Does the cash burn include PSP money? If not, that is insanely low. Good for AS.
 
gmcc
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Re: AS Q2 results

Thu Jul 23, 2020 7:45 pm

tphuang wrote:
Does the cash burn include PSP money? If not, that is insanely low. Good for AS.

From what was said on the call, that did not include PSP. However management did say that it would go up in 3rd quarter as maintenance for parked planes coming back online would kicks in.
 
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aemoreira1981
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Re: AS Q2 results

Thu Jul 23, 2020 7:48 pm

EA CO AS wrote:
32andBelow wrote:
89 aircraft is pretty large percentage of Alaska’s fleet. are they mainly a319/20?


The A319s are gone and aren’t coming back. The parked storage is a mix of A320s and various B737NG variants. Capacity is only at about 55% of pre-COVID levels so the other airframes will take time to come back, with a projected summer 2021 size of 80% of pre-COVID levels. This could be higher or lower depending on demand though.


There have been 2 aircraft parked at JFK's T7 for almost this whole time. N530AS hasn't moved in about 4 months. N922VA was parked at JFK for 2 months and has been replaced with N577AS. Another 3 were parked on the cargo ramp. But why park planes at an expensive airport like JFK and not the desert?

As for AS, it would make sense to fly the A21Ns and B739s primarily, along with some B738s. Are the B737s (not counting the three BDSF frames) parked? Are there any A320 leases that can be terminated early or transferred to another carrier, such as F9 or AC? (AC could use those A320s at mainline for a few years to replace their really old models.)
Last edited by aemoreira1981 on Thu Jul 23, 2020 7:50 pm, edited 1 time in total.
 
tphuang
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Re: AS Q2 results

Thu Jul 23, 2020 7:50 pm

gmcc wrote:
tphuang wrote:
Does the cash burn include PSP money? If not, that is insanely low. Good for AS.

From what was said on the call, that did not include PSP. However management did say that it would go up in 3rd quarter as maintenance for parked planes coming back online would kicks in.

Well, everyone's cash burns is going back up in July/August. Even if there is extra cost coming in from maintenance of the parked planes, that's still very impressive cost control.
 
phxa340
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Re: AS Q2 results

Thu Jul 23, 2020 8:05 pm

aemoreira1981 wrote:
EA CO AS wrote:
32andBelow wrote:
89 aircraft is pretty large percentage of Alaska’s fleet. are they mainly a319/20?


The A319s are gone and aren’t coming back. The parked storage is a mix of A320s and various B737NG variants. Capacity is only at about 55% of pre-COVID levels so the other airframes will take time to come back, with a projected summer 2021 size of 80% of pre-COVID levels. This could be higher or lower depending on demand though.


There have been 2 aircraft parked at JFK's T7 for almost this whole time. N530AS hasn't moved in about 4 months. N922VA was parked at JFK for 2 months and has been replaced with N577AS. Another 3 were parked on the cargo ramp. But why park planes at an expensive airport like JFK and not the desert?

As for AS, it would make sense to fly the A21Ns and B739s primarily, along with some B738s. Are the B737s (not counting the three BDSF frames) parked? Are there any A320 leases that can be terminated early or transferred to another carrier, such as F9 or AC? (AC could use those A320s at mainline for a few years to replace their really old models.)


Just wondering if demand is so low for space at JFK right now that it’s just not that expensive ?
 
32andBelow
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Re: AS Q2 results

Thu Jul 23, 2020 8:24 pm

aemoreira1981 wrote:
EA CO AS wrote:
32andBelow wrote:
89 aircraft is pretty large percentage of Alaska’s fleet. are they mainly a319/20?


The A319s are gone and aren’t coming back. The parked storage is a mix of A320s and various B737NG variants. Capacity is only at about 55% of pre-COVID levels so the other airframes will take time to come back, with a projected summer 2021 size of 80% of pre-COVID levels. This could be higher or lower depending on demand though.


There have been 2 aircraft parked at JFK's T7 for almost this whole time. N530AS hasn't moved in about 4 months. N922VA was parked at JFK for 2 months and has been replaced with N577AS. Another 3 were parked on the cargo ramp. But why park planes at an expensive airport like JFK and not the desert?

As for AS, it would make sense to fly the A21Ns and B739s primarily, along with some B738s. Are the B737s (not counting the three BDSF frames) parked? Are there any A320 leases that can be terminated early or transferred to another carrier, such as F9 or AC? (AC could use those A320s at mainline for a few years to replace their really old models.)

I mean they own gates their right? And they might have a nightly parking agreement they are paying for.
 
gmcc
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Re: AS Q2 results

Thu Jul 23, 2020 8:37 pm

aemoreira1981 wrote:
EA CO AS wrote:
32andBelow wrote:
89 aircraft is pretty large percentage of Alaska’s fleet. are they mainly a319/20?


The A319s are gone and aren’t coming back. The parked storage is a mix of A320s and various B737NG variants. Capacity is only at about 55% of pre-COVID levels so the other airframes will take time to come back, with a projected summer 2021 size of 80% of pre-COVID levels. This could be higher or lower depending on demand though.


There have been 2 aircraft parked at JFK's T7 for almost this whole time. N530AS hasn't moved in about 4 months. N922VA was parked at JFK for 2 months and has been replaced with N577AS. Another 3 were parked on the cargo ramp. But why park planes at an expensive airport like JFK and not the desert?

As for AS, it would make sense to fly the A21Ns and B739s primarily, along with some B738s. Are the B737s (not counting the three BDSF frames) parked? Are there any A320 leases that can be terminated early or transferred to another carrier, such as F9 or AC? (AC could use those A320s at mainline for a few years to replace their really old models.)


Want to say AS had not been using T7 at JFK except for depart/arrives after 8pm. AS and BA had been in T8 for most of the time so T7 might have been a good place to put a spare frame or two. That will probably change if they decide to reopen the lounge. The 737-700 are alive and well up in Alaska. I am not sure they want to return any more planes early as they incurred a $69 million charge this quarter for lease returns.
 
maverick4002
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Re: AS Q2 results

Thu Jul 23, 2020 9:28 pm

$120M cash burn in June so $4M a day? Thats really impressive, isnt it?
 
32andBelow
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Re: AS Q2 results

Thu Jul 23, 2020 9:56 pm

maverick4002 wrote:
$120M cash burn in June so $4M a day? Thats really impressive, isnt it?

They are so much smaller than the big airlines
 
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Re: AS Q2 results

Thu Jul 23, 2020 10:10 pm

32andBelow wrote:
maverick4002 wrote:
$120M cash burn in June so $4M a day? Thats really impressive, isnt it?

They are so much smaller than the big airlines


It’s down from over $11M/day when this began.
"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
 
32andBelow
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Re: AS Q2 results

Thu Jul 23, 2020 10:12 pm

EA CO AS wrote:
32andBelow wrote:
maverick4002 wrote:
$120M cash burn in June so $4M a day? Thats really impressive, isnt it?

They are so much smaller than the big airlines


It’s down from over $11M/day when this began.

Which is good. But I think ppl want to compare it to the burns of the majors and it’s not really comparable
 
tphuang
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Re: AS Q2 results

Thu Jul 23, 2020 10:16 pm

32andBelow wrote:
EA CO AS wrote:
32andBelow wrote:
They are so much smaller than the big airlines


It’s down from over $11M/day when this began.

Which is good. But I think ppl want to compare it to the burns of the majors and it’s not really comparable


if you look at their size in terms of revenue pre-COVID, they were 1/5 big 3. Their cash burn is definitely less than 1/5 of big 3. So they are doing well. Maybe better than any other airline out there.
 
SESGDL
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Re: AS Q2 results

Thu Jul 23, 2020 10:26 pm

tphuang wrote:
32andBelow wrote:
EA CO AS wrote:

It’s down from over $11M/day when this began.

Which is good. But I think ppl want to compare it to the burns of the majors and it’s not really comparable


if you look at their size in terms of revenue pre-COVID, they were 1/5 big 3. Their cash burn is definitely less than 1/5 of big 3. So they are doing well. Maybe better than any other airline out there.


AS has much less international exposure, so most of their network hasn’t been as dramatically impacted as the other major carriers (except WN). Not any more impressive than the decrease in cash burn for the other carriers.

Jeremy
 
ASFlyer
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Re: AS Q2 results

Fri Jul 24, 2020 12:27 am

SESGDL wrote:
tphuang wrote:
32andBelow wrote:
Which is good. But I think ppl want to compare it to the burns of the majors and it’s not really comparable


if you look at their size in terms of revenue pre-COVID, they were 1/5 big 3. Their cash burn is definitely less than 1/5 of big 3. So they are doing well. Maybe better than any other airline out there.


AS has much less international exposure, so most of their network hasn’t been as dramatically impacted as the other major carriers (except WN). Not any more impressive than the decrease in cash burn for the other carriers.

Jeremy


Why does network matter in terms of getting costs down? Alaska has more substantially reduced their costs in a short period of time, much better than their competitors - even when considering the difference in size - on a percentage basis.
 
ShinyAndChrome
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Re: AS Q2 results

Fri Jul 24, 2020 12:52 am

ASFlyer wrote:
SESGDL wrote:
tphuang wrote:

if you look at their size in terms of revenue pre-COVID, they were 1/5 big 3. Their cash burn is definitely less than 1/5 of big 3. So they are doing well. Maybe better than any other airline out there.


AS has much less international exposure, so most of their network hasn’t been as dramatically impacted as the other major carriers (except WN). Not any more impressive than the decrease in cash burn for the other carriers.

Jeremy


Why does network matter in terms of getting costs down? Alaska has more substantially reduced their costs in a short period of time, much better than their competitors - even when considering the difference in size - on a percentage basis.


Note that the operative term here isn't cost, it's cash burn. The US3 all have hundreds of widebodies (and thousands of widebody pilots) they can't employ now that international revenue has slowed to a trickle. That means lots in terms of ongoing financing costs, storage costs, contractural pilot minimums, etc. with no income to offset that. That's not even factoring in money paid to lease terminal space overseas that isn't getting used. Additionally, since this is talking about Q2, the US3 also faced a ton of cash outflow in terms of refunds, which since international tickets tend to be more expensive, means more money out the door.

Not saying that what AS has done isn't impressive. It's just a bit too apples and oranges to tout as an example of their superiority.
 
ericm2031
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Re: AS Q2 results

Fri Jul 24, 2020 12:53 am

So it sounds like AS is flying around 135 mainline and 95 regional? I wonder if that is helping keep their cash burn down. I'm noticing a lot of routes that you would think are all mainline that are primarily or exclusively regional now...LAX-PDX is one example.
 
32andBelow
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Re: AS Q2 results

Fri Jul 24, 2020 2:15 am

ericm2031 wrote:
So it sounds like AS is flying around 135 mainline and 95 regional? I wonder if that is helping keep their cash burn down. I'm noticing a lot of routes that you would think are all mainline that are primarily or exclusively regional now...LAX-PDX is one example.

Isn’t that roughly their size prior to virgin?
 
FlyingElvii
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Re: AS Q2 results

Fri Jul 24, 2020 2:25 am

tphuang wrote:
Does the cash burn include PSP money? If not, that is insanely low. Good for AS.

Was thinking the same thing. Burning "only" $4 Mil a day, with billions in available cash.
All of the Horizon and SkyWest aircraft flying is huge. That means they aren't flying a ton of empty jets to placate the Pilot Union.
Overall, I would assume they are in a very good position to weather the storm.
 
FlyingElvii
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Re: AS Q2 results

Fri Jul 24, 2020 3:34 am

Per APC, Alaska Group will not have to lay off ANY pilots.
Enough took the early out retirement offer and Extended Leaves to avoid furloughs. In fact, they are being told to not get too comfortable on leave, as they may call some back in 4-5 months.
 
flyboy7974
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Re: AS Q2 results

Fri Jul 24, 2020 4:32 am

EA CO AS wrote:
32andBelow wrote:
89 aircraft is pretty large percentage of Alaska’s fleet. are they mainly a319/20?


The A319s are gone and aren’t coming back. The parked storage is a mix of A320s and various B737NG variants. Capacity is only at about 55% of pre-COVID levels so the other airframes will take time to come back, with a projected summer 2021 size of 80% of pre-COVID levels. This could be higher or lower depending on demand though.


Pre Covid, AA was in talks for their A319, like the 8 ex F9 they acquired, I doubt if any longer though.
 
JayinKitsap
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Re: AS Q2 results

Fri Jul 24, 2020 4:50 am

Reading the OP, I thought "Gee, AS is going to survive this". Alaska is my hometown airline so it is good to see.

Capacity at 55% of pre-Covid seems much better than a lot of airlines, with the belt tightening it won't take a large increase in demand to break even on an operational basis. Far harder if only 30% of pre Covid, getting back from that would be brutal.
 
n7371f
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Re: AS Q2 results

Fri Jul 24, 2020 5:23 am

AS MGMT isn't going to do anything foolish and doesn't have to (see AAL). At this point NO single airline is assured of survival, lest Ch 11. It's out of their hands to much regard. In call one of the AS EXEC mentioned their attempts to "creatively" get out of 45-48 expiring A320 aircraft with leases up in 2-5 years. So that should, at this point in time, assure folks that the 320 fleet is kaput at AS. If they could drop all of them tomorrow, they would. It's now a matter of does the 321NEO fleet either at 10 or a larger size, create greater profits than an all Boeing 737 fleet.
 
n7371f
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Re: AS Q2 results

Fri Jul 24, 2020 5:24 am

Those AA talks were with the lessor, not AS.

flyboy7974 wrote:
EA CO AS wrote:
32andBelow wrote:
89 aircraft is pretty large percentage of Alaska’s fleet. are they mainly a319/20?


The A319s are gone and aren’t coming back. The parked storage is a mix of A320s and various B737NG variants. Capacity is only at about 55% of pre-COVID levels so the other airframes will take time to come back, with a projected summer 2021 size of 80% of pre-COVID levels. This could be higher or lower depending on demand though.


Pre Covid, AA was in talks for their A319, like the 8 ex F9 they acquired, I doubt if any longer though.
 
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Re: AS Q2 results

Fri Jul 24, 2020 7:08 am

flyboy7974 wrote:
Pre Covid, AA was in talks for their A319, like the 8 ex F9 they acquired, I doubt if any longer though.


Oh man, that whole AA getting the A319 fleet thing went away months ago.
"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
 
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Re: AS Q2 results

Fri Jul 24, 2020 7:16 am

n7371f wrote:
In call one of the AS EXEC mentioned their attempts to "creatively" get out of 45-48 expiring A320 aircraft with leases up in 2-5 years.


It's not about getting out of them, it's about getting the leases down to more reasonable rates. When VX acquired the A320s, being the financial basketcase they were, the terms were ridiculous, and AS inherited those crazy rates. Not surprisingly, the lessors haven't been interested in renegotiating those lease rates. Another problem is that you're not talking about one or two lessors, but dozens of them - no one was interested in seeing more than a few of their assets leased to VX at a time because they were just so unstable. So, VX had to get their planes from many, many sources.

Of course now with COVID providing a huge glut on the secondhand market however, AS has the leverage on their side as the lessors desperately want to avoid getting those planes back, especially since many would never find work again. So, Nat Pieper and his team have work to do in convincing these dozens of lessors that renegotiating the lease rates on the A320s are in their best interest.
"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
 
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lightsaber
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Re: AS Q2 results

Fri Jul 24, 2020 2:32 pm

EA CO AS wrote:
n7371f wrote:
In call one of the AS EXEC mentioned their attempts to "creatively" get out of 45-48 expiring A320 aircraft with leases up in 2-5 years.


It's not about getting out of them, it's about getting the leases down to more reasonable rates. When VX acquired the A320s, being the financial basketcase they were, the terms were ridiculous, and AS inherited those crazy rates. Not surprisingly, the lessors haven't been interested in renegotiating those lease rates. Another problem is that you're not talking about one or two lessors, but dozens of them - no one was interested in seeing more than a few of their assets leased to VX at a time because they were just so unstable. So, VX had to get their planes from many, many sources.

Of course now with COVID providing a huge glut on the secondhand market however, AS has the leverage on their side as the lessors desperately want to avoid getting those planes back, especially since many would never find work again. So, Nat Pieper and his team have work to do in convincing these dozens of lessors that renegotiating the lease rates on the A320s are in their best interest.

AS will shrink. The MAX will return to service before the A319 or A320 are needed.

AS is going to cut costs. I would consider this no bluff. I could see 20 to 30 retained for the right pricing. The other 15 to 28 will be returned. More could be kept, but that would require a deal on terms too favorable to AS. All could go if pricing is wrong.

This isn't about capability. This is about what saves AS the most money in the next 2 years. Nothing personal. But now isn't the time for niceties.

The leasing companies spread risk with traunches of bonds just like the sub prime mortgage crisis. Most will survive; enough will.

AS must start returning A320 to convince leasing companies they are serious. Then Alaska could entertain negotiations. Because if the timing, they would know the cost of MAX replacement and I see no risk if timely delivery.

It will be for those dozen leasors to determine their own fate. However, I cannot see AS keeping less than 20 (training and maintenance economy of scale) or more than 30 (mid-term demand). They should recall Indigo, GoAir, Easyjet, and AirAsia. The predicted over-supply is 2,500 aircraft in 20 months:

https://mobile.reuters.com/article/amp/idUSKCN24M09E

I am more bearish. In my opinion it shall get worse.

Lightsaber
Flu+Covid19 is bad. Consider a flu vaccine, if not for yourself, to protect someone you care about.
 
panam330
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Re: AS Q2 results

Fri Jul 24, 2020 3:31 pm

Pretty impressive cash burn control, given the current environment. Yes, their size and lack of international service makes them especially nimble right now, but doing all of the headcount reductions and avoiding pilot furloughs is quite impressive, IMO. I hope they’re able to keep it up.
 
gmcc
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Re: AS Q2 results

Fri Jul 24, 2020 4:18 pm

lightsaber wrote:
EA CO AS wrote:
n7371f wrote:
In call one of the AS EXEC mentioned their attempts to "creatively" get out of 45-48 expiring A320 aircraft with leases up in 2-5 years.


It's not about getting out of them, it's about getting the leases down to more reasonable rates. When VX acquired the A320s, being the financial basketcase they were, the terms were ridiculous, and AS inherited those crazy rates. Not surprisingly, the lessors haven't been interested in renegotiating those lease rates. Another problem is that you're not talking about one or two lessors, but dozens of them - no one was interested in seeing more than a few of their assets leased to VX at a time because they were just so unstable. So, VX had to get their planes from many, many sources.

Of course now with COVID providing a huge glut on the secondhand market however, AS has the leverage on their side as the lessors desperately want to avoid getting those planes back, especially since many would never find work again. So, Nat Pieper and his team have work to do in convincing these dozens of lessors that renegotiating the lease rates on the A320s are in their best interest.

AS will shrink. The MAX will return to service before the A319 or A320 are needed.

AS is going to cut costs. I would consider this no bluff. I could see 20 to 30 retained for the right pricing. The other 15 to 28 will be returned. More could be kept, but that would require a deal on terms too favorable to AS. All could go if pricing is wrong.

This isn't about capability. This is about what saves AS the most money in the next 2 years. Nothing personal. But now isn't the time for niceties.

The leasing companies spread risk with traunches of bonds just like the sub prime mortgage crisis. Most will survive; enough will.

AS must start returning A320 to convince leasing companies they are serious. Then Alaska could entertain negotiations. Because if the timing, they would know the cost of MAX replacement and I see no risk if timely delivery.

It will be for those dozen leasors to determine their own fate. However, I cannot see AS keeping less than 20 (training and maintenance economy of scale) or more than 30 (mid-term demand). They should recall Indigo, GoAir, Easyjet, and AirAsia. The predicted over-supply is 2,500 aircraft in 20 months:

https://mobile.reuters.com/article/amp/idUSKCN24M09E

I am more bearish. In my opinion it shall get worse.

Lightsaber


I am not convinced the AS even takes the Max's they have on order. It must be well past the time that they can walk away from the contract for non delivery or some other clause. They have more than enough lift for the next couple of years to send the 320s back to the leasors as they come off of leases. Retrofitting the 737's, except for the original 900s, with the sky interior, space bins, and the new interior has to be cheaper that new planes and give the fleet a more consistent feel. Ten after a couple of years, see what the market looks like.
 
LAXBUR
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Re: AS Q2 results

Fri Jul 24, 2020 4:39 pm

A lot of people on here really crap on Alaska after VX and wish for it’s demise via merger or annihilation by B6. They balance favorable customer service and a good balance sheet better than anyone; so I don’t think they’re going anywhere.
 
durangomac
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Re: AS Q2 results

Fri Jul 24, 2020 11:48 pm

aemoreira1981 wrote:
EA CO AS wrote:
32andBelow wrote:
89 aircraft is pretty large percentage of Alaska’s fleet. are they mainly a319/20?


The A319s are gone and aren’t coming back. The parked storage is a mix of A320s and various B737NG variants. Capacity is only at about 55% of pre-COVID levels so the other airframes will take time to come back, with a projected summer 2021 size of 80% of pre-COVID levels. This could be higher or lower depending on demand though.


There have been 2 aircraft parked at JFK's T7 for almost this whole time. N530AS hasn't moved in about 4 months. N922VA was parked at JFK for 2 months and has been replaced with N577AS. Another 3 were parked on the cargo ramp. But why park planes at an expensive airport like JFK and not the desert?

As for AS, it would make sense to fly the A21Ns and B739s primarily, along with some B738s. Are the B737s (not counting the three BDSF frames) parked? Are there any A320 leases that can be terminated early or transferred to another carrier, such as F9 or AC? (AC could use those A320s at mainline for a few years to replace their really old models.)



Planes in short term storage are parked at airports where AS mechanics can easily do weekly/monthly maintenance tasks. This keeps costs down because the mechanics are still getting paid using the CARES act money. The other benefit is those planes being in short term storage can come back online quickly and those mechanics are already there and can do the tasks needed to bring them online. Some planes have transferred to the desert for long term storage and at that point the folks that runs those facilities are doing their thing per long term storage procedures.

Short answer is yes it's more expensive for parking but less expensive from a maintenance perspective, I suspect that it's cheaper overall.
 
n7371f
Posts: 1818
Joined: Fri Jul 04, 2008 3:54 pm

Re: AS Q2 results

Sat Jul 25, 2020 4:18 am

AS isn't going to rehab the interior of the 737NG with non Sky interior regardless. Hell they don't even have concrete plans to get rid of the 1989 bulkhead carpeting.

gmcc wrote:
lightsaber wrote:
EA CO AS wrote:

It's not about getting out of them, it's about getting the leases down to more reasonable rates. When VX acquired the A320s, being the financial basketcase they were, the terms were ridiculous, and AS inherited those crazy rates. Not surprisingly, the lessors haven't been interested in renegotiating those lease rates. Another problem is that you're not talking about one or two lessors, but dozens of them - no one was interested in seeing more than a few of their assets leased to VX at a time because they were just so unstable. So, VX had to get their planes from many, many sources.

Of course now with COVID providing a huge glut on the secondhand market however, AS has the leverage on their side as the lessors desperately want to avoid getting those planes back, especially since many would never find work again. So, Nat Pieper and his team have work to do in convincing these dozens of lessors that renegotiating the lease rates on the A320s are in their best interest.

AS will shrink. The MAX will return to service before the A319 or A320 are needed.

AS is going to cut costs. I would consider this no bluff. I could see 20 to 30 retained for the right pricing. The other 15 to 28 will be returned. More could be kept, but that would require a deal on terms too favorable to AS. All could go if pricing is wrong.

This isn't about capability. This is about what saves AS the most money in the next 2 years. Nothing personal. But now isn't the time for niceties.

The leasing companies spread risk with traunches of bonds just like the sub prime mortgage crisis. Most will survive; enough will.

AS must start returning A320 to convince leasing companies they are serious. Then Alaska could entertain negotiations. Because if the timing, they would know the cost of MAX replacement and I see no risk if timely delivery.

It will be for those dozen leasors to determine their own fate. However, I cannot see AS keeping less than 20 (training and maintenance economy of scale) or more than 30 (mid-term demand). They should recall Indigo, GoAir, Easyjet, and AirAsia. The predicted over-supply is 2,500 aircraft in 20 months:

https://mobile.reuters.com/article/amp/idUSKCN24M09E

I am more bearish. In my opinion it shall get worse.

Lightsaber


I am not convinced the AS even takes the Max's they have on order. It must be well past the time that they can walk away from the contract for non delivery or some other clause. They have more than enough lift for the next couple of years to send the 320s back to the leasors as they come off of leases. Retrofitting the 737's, except for the original 900s, with the sky interior, space bins, and the new interior has to be cheaper that new planes and give the fleet a more consistent feel. Ten after a couple of years, see what the market looks like.
 
n7371f
Posts: 1818
Joined: Fri Jul 04, 2008 3:54 pm

Re: AS Q2 results

Sat Jul 25, 2020 4:29 am

Yes. Good point. Heard that. But even before this disaster of Covid, these planes were leaving. AS especially now has no need for them. What are you folks going to do? Keep 73H parked or retire them? No way. Good opening to get lower lease rates based on good credit vs VX which was an airline with a 580 credit score trying to buy a new car.

EA CO AS wrote:
n7371f wrote:
In call one of the AS EXEC mentioned their attempts to "creatively" get out of 45-48 expiring A320 aircraft with leases up in 2-5 years.


It's not about getting out of them, it's about getting the leases down to more reasonable rates. When VX acquired the A320s, being the financial basketcase they were, the terms were ridiculous, and AS inherited those crazy rates. Not surprisingly, the lessors haven't been interested in renegotiating those lease rates. Another problem is that you're not talking about one or two lessors, but dozens of them - no one was interested in seeing more than a few of their assets leased to VX at a time because they were just so unstable. So, VX had to get their planes from many, many sources.

Of course now with COVID providing a huge glut on the secondhand market however, AS has the leverage on their side as the lessors desperately want to avoid getting those planes back, especially since many would never find work again. So, Nat Pieper and his team have work to do in convincing these dozens of lessors that renegotiating the lease rates on the A320s are in their best interest.
 
User avatar
EA CO AS
Topic Author
Posts: 15725
Joined: Wed Nov 14, 2001 8:54 am

Re: AS Q2 results

Sat Jul 25, 2020 4:52 am

n7371f wrote:
AS isn't going to rehab the interior of the 737NG with non Sky interior regardless. Hell they don't even have concrete plans to get rid of the 1989 bulkhead carpeting.


Huh? Your info is out of date. The new interiors, while on hold for now, see the tapestry bulkhead carpets leave the fleet. In fact, some of them that have been removed are up for bidding on the AS Employee Assistance Fund auction site.
"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
 
32andBelow
Posts: 4931
Joined: Mon Sep 03, 2012 2:54 am

Re: AS Q2 results

Sat Jul 25, 2020 5:35 am

EA CO AS wrote:
n7371f wrote:
AS isn't going to rehab the interior of the 737NG with non Sky interior regardless. Hell they don't even have concrete plans to get rid of the 1989 bulkhead carpeting.


Huh? Your info is out of date. The new interiors, while on hold for now, see the tapestry bulkhead carpets leave the fleet. In fact, some of them that have been removed are up for bidding on the AS Employee Assistance Fund auction site.

Just got flashback of flying on the 400s through southeast. Those seats were so comfortable. Like big couches.
 
Douglas7Seas
Posts: 122
Joined: Mon May 10, 2004 5:00 pm

Re: AS Q2 results

Sat Jul 25, 2020 5:55 am

I flew Alaska frequently during the early part of the 2000's - they were head and shoulders above everyone else in terms of quality. Then came 2010 and Alaska instituted a cost cutting program, similar to what is described above. The results, at least as I observed them, were surly employees, late arrivals and departures and airplanes that were frequently... broken.
Be different; Be nice.
 
n7371f
Posts: 1818
Joined: Fri Jul 04, 2008 3:54 pm

Re: AS Q2 results

Sat Jul 25, 2020 6:24 am

Well I've been on 8-10 737NG since new year and they all looked the same as 20 years ago. If there's a plan to refresh the "Proudly All Boeing" fleet I must've missed the press release. Plus I'm just messing with you partly. As awful and grandmother as carpet bulkheads with your design look, I have a special place for the carpet like 80's NW, PS, HP, FL...

EA CO AS wrote:
n7371f wrote:
AS isn't going to rehab the interior of the 737NG with non Sky interior regardless. Hell they don't even have concrete plans to get rid of the 1989 bulkhead carpeting.


Huh? Your info is out of date. The new interiors, while on hold for now, see the tapestry bulkhead carpets leave the fleet. In fact, some of them that have been removed are up for bidding on the AS Employee Assistance Fund auction site.
Last edited by n7371f on Sat Jul 25, 2020 6:46 am, edited 2 times in total.
 
Max Q
Posts: 8409
Joined: Wed May 09, 2001 12:40 pm

Re: AS Q2 results

Sat Jul 25, 2020 6:39 am

It’s a sign of these desperate times we celebrate the airlines losing the least money


But good for Alaska, they’re an outstanding, well run operation, they will endure
The best contribution to safety is a competent Pilot.


GGg
 
chrisair
Posts: 2152
Joined: Fri Sep 01, 2000 11:32 pm

Re: AS Q2 results

Sat Jul 25, 2020 7:17 am

EA CO AS wrote:
Another problem is that you're not talking about one or two lessors, but dozens of them - no one was interested in seeing more than a few of their assets leased to VX at a time because they were just so unstable. So, VX had to get their planes from many, many sources.


You ever see the lease documents for some of those planes? I made the mistake of looking up the LLC that owned a former VX plane and found some document that was well over 1,000 pages of various signatures of lawyers from all over the planet. I couldn’t tell if it was a few banks or if it was one of those LLCs that’s made up of several dozen individuals. Fascinating stuff before page nine. If they have to get approval from 1,000 different people, it’s gonna take them forever to clean those leases up.

EA CO AS wrote:
Huh? Your info is out of date. The new interiors, while on hold for now, see the tapestry bulkhead carpets leave the fleet. In fact, some of them that have been removed are up for bidding on the AS Employee Assistance Fund auction site.


If I give you some cash, will you bid on one for me? It’ll go great with my PDX Carpet doormat! :biggrin:
 
ASFlyer
Posts: 1723
Joined: Sat May 28, 2005 1:25 pm

Re: AS Q2 results

Sat Jul 25, 2020 7:38 am

chrisair wrote:
EA CO AS wrote:
Another problem is that you're not talking about one or two lessors, but dozens of them - no one was interested in seeing more than a few of their assets leased to VX at a time because they were just so unstable. So, VX had to get their planes from many, many sources.


You ever see the lease documents for some of those planes? I made the mistake of looking up the LLC that owned a former VX plane and found some document that was well over 1,000 pages of various signatures of lawyers from all over the planet. I couldn’t tell if it was a few banks or if it was one of those LLCs that’s made up of several dozen individuals. Fascinating stuff before page nine. If they have to get approval from 1,000 different people, it’s gonna take them forever to clean those leases up.

EA CO AS wrote:
Huh? Your info is out of date. The new interiors, while on hold for now, see the tapestry bulkhead carpets leave the fleet. In fact, some of them that have been removed are up for bidding on the AS Employee Assistance Fund auction site.


If I give you some cash, will you bid on one for me? It’ll go great with my PDX Carpet doormat! :biggrin:


You can bid on them yourself if you feel so inclined

https://www.biddingforgood.com/auction/ ... =342222639
 
User avatar
NameOmitted
Posts: 882
Joined: Sun Oct 23, 2016 7:59 pm

Re: AS Q2 results

Sat Jul 25, 2020 3:32 pm

n7371f wrote:
"Proudly All Boeing"

Yay! I've got a Bingo!

Man, for a minute there I was not sure the "Proudly All Boeing" was going to be called this thread.
 
Lootess
Posts: 444
Joined: Sun May 13, 2018 6:15 am

Re: AS Q2 results

Sat Jul 25, 2020 4:30 pm

LAXBUR wrote:
A lot of people on here really crap on Alaska after VX and wish for it’s demise via merger or annihilation by B6. They balance favorable customer service and a good balance sheet better than anyone; so I don’t think they’re going anywhere.


I like AS. During their heyday of being aligned with DL, I flew them more than ever, in first class, and will always vouch for them despite them both going separate ways. I'll always remember the flight crew's reactions I saw on the last day they were serviced by DL over and under wing. They both got along real well on the frontlines, even if they didn't in the board room. The VX merger was exciting because it gave them a commanding presence on the west coast to defend both DL and B6's growth. In hindsight it still was a good idea, they needed the market share.

Just they gobbled up an airline that just didn't really have the best leasing finances, but AS made a lot of money that it didn't really matter and they could drop leases as they expire and ride up expansion as they got new MAX planes. Now like everyone else they are going to find ways to trim the bad leases sooner than later.
 
75driver
Posts: 88
Joined: Mon Jul 20, 2020 2:02 pm

Re: Alaska Q2 2020 results

Sat Aug 15, 2020 6:53 pm

Interesting move re: sustainable fuel

https://cheddar.com/media/alaska-airlin ... dly-flying

“We are, as an industry and I think as a society, we’re on a journey to make sure that we are reducing carbon emissions and protecting our environment,” Diana Birkett Rakow, vice president of external relations at Alaska Airlines, told Cheddar. “And there’s no time like the present to keep making progress.”

Rakow said Alaska Airlines has flown 80 trial flights using sustainable fuel. Renewable diesel and sustainable aviation fuel will now be used on all of its flights out of San Francisco.
 
User avatar
NameOmitted
Posts: 882
Joined: Sun Oct 23, 2016 7:59 pm

Re: Alaska Q2 2020 results

Sat Aug 15, 2020 10:14 pm

75driver wrote:

Rakow said Alaska Airlines has flown 80 trial flights using sustainable fuel. Renewable diesel and sustainable aviation fuel will now be used on all of its flights out of San Francisco.


Renewable diesel? I thought jet fuel was closer to kerosene then diesel. Does anyone have information about the science behind this article?
 
miegapele
Posts: 48
Joined: Wed Sep 09, 2015 12:24 pm

Re: Alaska Q2 2020 results

Sun Aug 16, 2020 9:02 am

NameOmitted wrote:

Renewable diesel? I thought jet fuel was closer to kerosene then diesel. Does anyone have information about the science behind this article?


Jet fuel is very similar to diesel. US military even uses JP-8 for ground vehicles to simplify logictics.
 
birdup
Posts: 20
Joined: Sat Apr 20, 2019 2:08 pm

Re: Alaska Q2 2020 results

Sun Aug 16, 2020 1:46 pm

NameOmitted wrote:
75driver wrote:

Rakow said Alaska Airlines has flown 80 trial flights using sustainable fuel. Renewable diesel and sustainable aviation fuel will now be used on all of its flights out of San Francisco.


Renewable diesel? I thought jet fuel was closer to kerosene then diesel. Does anyone have information about the science behind this article?


Kerosene is basically a lighter diesel. Jet fuel is basically kerosene. Both can be run in diesel trucks/etc without too much trouble.

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