Alaska Airlines Reveals A Profit Of $400 Million

Alaska Airlines has reported a net profit of almost $400 million for Q2 2021. With air travel picking up again, the airline was able to run a profit after making losses for the same period in 2020. However, excluding CARES Act Payroll Support Program (PSP) wage offsets and other adjustments, the airline in fact made an adjusted net loss of $38 million for the quarter.

Alaska Boeing 737-900
Alaska’s Q2 results reveal a net profit of almost $400 million. Photo: Vincenzo Pace | Simple Flying

Alaska made a profit of $397 million for Q2

After a relatively impressive second quarter performance, Alaska has revealed a profit of $397 million for Q2 2021. The profit, calculated under Generally Accepted Accounting Principles (GAAP), is a significant improvement on Alaska’s net losses of $214 million for Q2 2020. Total operating revenue was $1.52 billion for the quarter, a huge increase from $421 million in Q2 2020.

Ben Minicucci, CEO of Alaska Airlines, said,

“As we put the worst of last year’s downturn behind us, Alaska is back on the path to profitability.”

However, excluding PSP wage offsets and other accounting adjustments, the airline reported an adjusted net loss of $38 million. Over the second quarter, Alaska received $503 million in PSP support and a total of $914 million for Q1 and Q2. The airline’s adjusted net losses for Q2 2020 were $439 million.

Alaska Airlines
Alaska Airlines has benefited from the reopening of California. Photo: Vincenzo Pace | Simple Flying

The airline achieved a load factor of 77% over the second quarter, with its capacity down by 20% compared to 2019. This was slightly higher than Alaska had projected (74-76%), with new routes and looser travel restrictions helping the airline to keep its planes relatively full.

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Debts, grants and operating cash flow

Alaska received a total of $664 million from the U.S. Treasury under an extension of the PSP through a mix of grants and loans. At the same time, the airline also paid back $570 million in debt.

This included a $135 million loan from the Treasury under the CARES Act and $363 million to two creditors. Alaska also revealed its debt-to-capitalization ratio was at 56%, down from 61% at the beginning of the year.

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The airline is emerging from its most difficult year with optimism. Photo: Getty Images

The airline was able to bring in $840 million in operating cash flow in the second quarter. However, this figure includes $489 million of PSP funding. Excluding PSP funding, quarterly operating cash flows improved over $580 million from Q1 2021.

Optimism for the rest of the year

After a horrible year for the aviation industry, Alaska is optimistic about the future. The airline is bolstering its fleet by exercising options for 13 Boeing 737-9 MAX and nine E175 (to be operated by Horizon Air), with deliveries expected from 2022 to 2024.

The airline has also added new connections to its network, including flights to Belize from Seattle and Los Angeles from November 2021. Additionally, seven new domestic routes ‘aimed at providing our West Coast guests more options to sun-filled destinations‘ have been announced.

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Alaska is exercising options to expand its fleet. Photo: Getty Images

CEO Minicucci added,

“We are executing our plan, rebuilding our network, leveraging our capacity to meet growing demand, and delivering exceptional service and value to our guests. I’m incredibly proud and grateful for how hard our employees are working and how they show up for each other and our guests every day with focus on safety, operational excellence and care.”

Do you think Alaska Airlines has plenty of reasons to be optimistic? Let us know what you think in the comments.

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