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Mar 31, 2020
Alaska Air Q1 2020 Earnings Report
Alaska Air Group experienced a net loss due to the unprecedented impacts of COVID-19, while taking key actions to ensure safety, preserve financial strength, and plan for the future.
Key Takeaways
Alaska Air Group reported a GAAP net loss of $232 million, or $1.87 per diluted share, for the first quarter of 2020, compared to a net income of $4 million, or $0.03 per diluted share in the first quarter of 2019. The results were significantly impacted by the COVID-19 pandemic, which led to a sharp decline in demand starting in February and overwhelming cancellations in March. The company is focused on ensuring the health and safety of guests and employees, preserving financial strength, and planning for the future.
Implemented enhanced cleaning procedures and safety measures for guests and employees.
Reduced capacity significantly in April and May, with further cuts expected in June.
Preserved financial strength by holding $2.9 billion in cash and marketable securities as of May 4, 2020, including CARES Act PSP funds.
Reduced cash burn rate from $400 million per month in March to $260 million in April, with a goal of reaching $200 million in June.
Revenue by Segment
Forward Guidance
Given the uncertainty, Alaska Air Group is focused on managing the crisis and has not provided specific forward guidance.
Positive Outlook
- Enhanced cleaning procedures on aircraft, including the use of high-grade, EPA-registered disinfectants and electrostatic sanitizing spray.
- All planes are equipped with hospital-grade HEPA filters.
- Extended elite Mileage Plan status to all members until Dec. 31, 2021.
- Provided guests with a 'Peace of Mind' waiver, allowing changes to ticketed travel without change or cancellation fees.
- Negotiated payment extensions or reductions with lessors, vendors and airports.
Challenges Ahead
- Demand remains over 90% below normal levels.
- Capacity in April decreased more than 80% compared to the prior year, and capacity cuts in May will also be at least 80%.
- Suspended over $500 million in capital spending.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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