Alaska Airlines has released an update on its performance trends. The carrier increased its passenger counts from May to July by over 150%. Also, from May to July, the airline increased its available capacity, passenger load factor, and revenue. While the situation remains fluid and capacity and revenue remain far below what it was in 2020, Alaska is expecting August to be a continuation of most trends, with some exceptions.
May to July data
In May, Alaska Airlines transported 424,000 revenue passengers. This was down about 90% from the same month in 2020 and was not too far off from what was expected. For one, May was the real start of the rebound after passenger numbers bottomed out in April. In May, the airline’s load factor was 40% with capacity measured in available seat miles (ASMs) down 79% year-over-year. Combined, the total revenue for the month was down 83%.
In June, Alaska Airlines increased its revenue passenger numbers to 887,000. This was down 79% and represented an increase of over 400,000 passengers from May. Capacity was down 68% year-over-year, but up from May. At the same time, Alaska’s June load factor was 52%. Revenue was down 75%– up from the previous month as well.
In July, Alaska Airlines flew 1.137 million passengers. This was up about 168% from May. Year-over-year revenue passenger numbers were down 74% with capacity down 63%. The airline’s load factor was 54% last month, bringing total year-over-year revenue down 73%.
Essentially, July was the best month when compared to May and June. Passenger count was up 168% from May and 28% from June.
What to make of these numbers
Note, however, that Alaska Airlines is limiting the number of passengers on board its aircraft and blocking seats through October 31st. This puts a cap on the airline’s load factor.
Factoring in the blocked seats, that 54% load factor for July is pretty stellar. The airline only is allowing about 60-70% of its available seats to be booked to promote social distancing onboard its planes.
What about August?
Alaska also released its expectations for August, which may change since the month is only about half over. The airline expects to carry around 1.2 to 1.3 million passengers– a slight increase from July numbers. That puts the year-over-year revenue passenger decrease at about 70-75%.
In terms of capacity, Alaska is planning on flying about 50% less year-over-year this month. That growth in capacity with a marginal increase in passenger count leads Alaska to expect a 40-45% load factor for the month– less than June and July. This puts revenue down about 70-75%, or in line with the decrease in passengers.
Higher cash burn in July
As for the airline’s cash position, July’s cash burn was about $175 million– higher than June’s. Alaska Airlines attributes this to a slowing in ticket sales and timing of certain payroll cycles. Lower debt and fewer refunds meant less cash going out.
Looking ahead to August, Alaska Airlines expects a cash burn to less than $125 million. The lower burn from July is primarily due to increased ticket sales. Cash burn does not take into account raised financing or payroll support funding. It does look at cash receipts and disbursements.
Assuming a monthly cash burn of $125 million across August’s 31 days, that brings average daily cash burn to about $4 million. Alaska Airlines continues to strive for a daily cash burn of $0 by the end of the year. Alaska is well-positioned to emerge from the crisis, but there’s still plenty of time until the end of the year. Which, as 2020 has shown, means there’s plenty of room for surprises– something that Alaska (and just about every other airline in the world) is hoping to avoid.
For now, the airline is looking optimistic and plans to fly its Embraer E175s in the state of Alaska and is targeting 35 nonstop routes (with 12 new destinations) out of Los Angeles (LAX) by the end of the year.
At the same time, the carrier is hoping to join the oneworld alliance by the end of the year and tap into more customer bookings for passengers looking to go international.
What do you make of Alaska Airlines’ July results? Do you think the carrier will reach cash break-even by the end of the year? Let us know in the comments!