Analysts take Alaska Airlines to task for mishandling a broad array of issues
Alaska Air Group‘s takeover of Virgin America created the fifth-biggest carrier by revenue in the US — and a lot of headaches for company executives. The deal gave Alaska a stronger foothold in California. Alaska-Virgin now has the largest number of seats among airlines serving that state. But other carriers have been discounting airfares on intra-California routes and on transcontinental routes to and from California — especially on so-called walk-up fares that are booked relatively close to departure. United has been especially aggressive in San Francisco, while Southwest has been aggressive on other routes. Meanwhile, Delta has been pressuring Alaska in its home turf of Seattle. The discounting forced Alaska into matching to maintain its market share. These pricing battles will continue for months to come, according to executives speaking during Alaska’s Q3 earnings call Wednesday. Besides various pricing battles, Alaska has also been distracted by the mechanics of the merger. The proof of this is that the airline, which has historically watched costs like a hawk, saw costs for operations, engine maintenance, marketing, and fuel rise in the third quarter. Fuel was up substantially because of hurricane-related supply issues. Brandon Pedersen, CFO, said, “We are more frustrated than investment analysts. There has been a lot of anxiety around here. There has been a lot of tough conversations in the last few weeks.” Executives noted the complexity of integrating hundreds of systems and dozens of agreements. On top of the logistics, the company has had to rethink how to manage the routes by Virgin America it has inherited and, on top of those new routes, it has recently added 44 new markets.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2017-10-26/unaligned/analysts-take-alaska-airlines-to-task-for-mishandling-a-broad-array-of-issues
https://portal.staralliance.com/cms/logo.png
Analysts take Alaska Airlines to task for mishandling a broad array of issues
Alaska Air Group‘s takeover of Virgin America created the fifth-biggest carrier by revenue in the US — and a lot of headaches for company executives. The deal gave Alaska a stronger foothold in California. Alaska-Virgin now has the largest number of seats among airlines serving that state. But other carriers have been discounting airfares on intra-California routes and on transcontinental routes to and from California — especially on so-called walk-up fares that are booked relatively close to departure. United has been especially aggressive in San Francisco, while Southwest has been aggressive on other routes. Meanwhile, Delta has been pressuring Alaska in its home turf of Seattle. The discounting forced Alaska into matching to maintain its market share. These pricing battles will continue for months to come, according to executives speaking during Alaska’s Q3 earnings call Wednesday. Besides various pricing battles, Alaska has also been distracted by the mechanics of the merger. The proof of this is that the airline, which has historically watched costs like a hawk, saw costs for operations, engine maintenance, marketing, and fuel rise in the third quarter. Fuel was up substantially because of hurricane-related supply issues. Brandon Pedersen, CFO, said, “We are more frustrated than investment analysts. There has been a lot of anxiety around here. There has been a lot of tough conversations in the last few weeks.” Executives noted the complexity of integrating hundreds of systems and dozens of agreements. On top of the logistics, the company has had to rethink how to manage the routes by Virgin America it has inherited and, on top of those new routes, it has recently added 44 new markets.<br/>
