SEATTLE — Alaska Air Group will eliminate about 200 workers–including 125 in Washington–in a cost-saving move as fuel prices have battered the aviation industry’s finances, according to a report from Reuters.
Chief Executive Ben Minicucci told employees in a memo seen by Reuters that the company will lay-off 200 non-contract positions as the air carrier could lose as much as $700 million this year if current conditions persist, marking its first annual adjusted pretax loss outside the pandemic since 2003.
“We must return to the financial discipline that has long been a key competitive advantage,” Minicucci said, adding that overhead expenses had “grown at a disproportionate rate to revenue” over the past few years.
In Alaska Air’s 3rd quarter earnings report two weeks ago, it cited $1.8 billion in additional fuel costs compared with its original annual plan.
The job cuts, according to Reuters, affect less than 1% of Alaska’s roughly 32,500 employees, a company spokesperson said. They include 125 positions in Washington state and 48 in Hawaii. No frontline, non-management jobs are being eliminated. Affected employees will have their last working day on November 13 but will continue receiving pay through December 31, along with severance and other support, according to the memo.
In other aviation news, an analyst for Aviation Week , says airlines will need to start retiring more narrowbody passenger jets as Airbus and Boeing both intended to ramp-up production capacity of their respective narrowbody models. The potential glut of narrowbody planes on the market is compounded by lack of growth in the two largest passenger markets for narrowbody jets, China and the U.S.
“It is hard to imagine airlines considerably expanding their narrowbody fleets when passenger air traffic in the two largest domestic markets is barely growing,” writes Scott Mikus. “With a steady supply of new jets and slower growth, the market is facing a surplus of narrowbody aircraft within the next few years.”
“The easiest way to preserve equilibrium in the narrowbody market is to retire older aircraft. Historical data show that the passenger narrowbody fleet grows roughly 3% annually. If that trend holds and Airbus and Boeing deliver 1,600-1,700 narrowbodies per year, retirements will need to increase. After several years in which less than 2% of the narrowbody fleet was retired annually, the industry should prepare for a prolonged period in which that rate could double and exceed 4-5%.”
Mikus is director of Melius Research covering aerospace, defense and space and a contributing columnist at Aviation Week.