Alaska plans for ‘choppy’ recovery as Delta variant takes a bite out of bookings

Unlike some of its peers, Alaska Airlines is striking a note of caution on the trajectory of the recovery, predicting that it will be “choppy,” despite reporting its first quarterly profit since the pandemic began. Bookings for travel in Q4 fell off in September and October and only now are beginning to show signs of strength. “The consequences of the Delta variant have not yet dissipated,” CCO Andrew Harrison told analysts during the company’s Q3 earnings call on Thursday. The airline expects the decline in bookings will cost it $200m in Q4. Alaska reported Fourth of July and Labor Day travel almost approaching 2019 levels. But, starting toward the end of July and ramping up through August, Alaska saw demand take a precipitous drop in September and October. Only now, in the last few weeks of October, has the Seattle-based carrier seen demand start to return. When the Delta variant began to spread, Q4 bookings fell to half of 2019 levels. They’ve now recovered to 10 percent below 2019. “We hate that we aren’t getting the fourth quarter we reasonably expected to have thanks to the Delta variant,” added CFO Shane Tackett. “The recovery will be choppy at times as we learn to live with Covid,” CEO Ben Minicucci said. Still, Alaska expects to return to its pre-Covid size by next summer and is poised to grow after that, if demand warrants. The carrier has firm orders for 93 Boeing 737-9s, including 63 due in 2022-23, and has options for a further 52 if needed. Some of these aircraft will be arriving to replace Alaska’s remaining 24 Airbus A320-family fleet, a legacy of its merger with Virgin America. These aircraft, after undergoing engine modifications and maintenance, will be returned to lessors in 2023. To prepare for a choppy recovery, Alaska is focused on keeping costs low. <br/>