Alaska Airlines reports net loss of USD 439m in Q2 2020

Alaska Airlines has reported a net loss of USD 439 million in the second quarter 2020, for a loss of USD 3.54 per diluted share, the company said.

The company said the loss is due to the Coronavirus pandemic.

When adding in special considerations, including funds from the Payroll Support Program and mark-to-market fuel hedge accounting adjustments, the airline says their GAAP reported net loss was only USD 214 million, compared to a gain of USD 262 million in the same period of 2019.

Alaska Airlines has reported the measures they took to reduce their burn rate from USD 400 million per month in March, to only USD 120 million per month by June. The airline grounded 89 mainline aircraft from their fleet, and eliminated 300 management positions from their payroll. In addition, the airline is offering early-out programs for frontline workers and pilots, in order to reduce expenses and maximize liquidity.

A portion of its reported liquidity comes from government support, alongside creative financing. The airline accepted a combined total of USD 1.2 billion of Payroll Support Program support, including USD 30 million to airline services subsidiary McGee Air Services. Additional cash came from financing on aircraft, including a USD 1.2 billion round of enhanced equipment trust certificates secured by 61 airframes in the company´s fleet. Alaska also hast the option to take an additional USD 1.1 billion in CARES Act loans from the federal government.

Over the past three months, Alaska only flew around 1.5 million revenue passengers in the three-month period, a decrease of 87.7 percent compared to the same period in 2019. Accordingly, the load factor over that period was only 38.4 percent — almost a 50 percent drop from the same quarter last year.

The airline is holding USD 3.8 billion in cash, with a debt-to-capitalization ratio of 51 percent. Alaska also received a formal invitation to join global airline alliance Oneworld on July 23, 2020, with the goal of fully joining the alliance by the end of the year, rapidly moving up their proposed timeline.