Alaska Air Group reports $131 million first-quarter loss tempered by federal emergency funds

Alaska Air Group Inc. is getting closer to breaking even more than a year into the pandemic but it’s not quite there yet.

The parent company to Alaska Airlines and regional carrier Horizon Air reported a $131 million first-quarter loss April 22.

The early 2021 results are a significant improvement over a year ago, when the Seattle-based airline company lost $232 million; however, the most recent $131 million loss includes federal CARES Act Payroll Support Program funding. Without that and other special items, the first quarter loss would have been $436 million. according to the company.

Alaska Air Group netted $181 million in the first quarter of 2019. The company lost $430 million in the fourth quarter of 2020 and more than $1.3 billion in all of last year.

New Alaska Air Group CEO Ben Minicucci thanked employees for helping return the airlines to positive cash flow in March at the end of the quarter in a statement accompanying the earnings report.

“We’re such a big company, but still small enough that each person’s work makes a difference,” Minicucci said. “We’re now laser focused on a return to profitability and growth, with aggressive cost control, optimal productivity across all our work groups, and the operational and financial discipline that Alaska is known for.”

Minicucci officially took over as Air Group’s top executive April 1 following the retirement of former CEO Brad Tilden, who took over in 2012 and led the company to a long run of record growth that included the 2016 acquisition of West Coast competitor Virgin America.

The $131 million loss was on the back of $797 million of operating revenue, a 51 percent year-over-year decline, and translated to a loss of $1.05 per share, according to the financial filings.

Alaska Air Group stock closed April 23 trading at $69.21 per share.

Despite the losses, Air Group leaders reduced the company’s net debt by approximately $100 million to $1.6 billion during the quarter and reported a debt-to-capitalization ratio of 62 percent at the end of the first reporting period for the year. Air Group leadership has long held a goal of maintaining the company’s debt-to-cap at less than 50 percent, which they had largely achieved prior to the pandemic.

The company also issued early recall notices to approximately 350 Alaska pilots who had been on extended leave during the quarter to prepare for summer growth.

In the state of Alaska, at least, officials at the Fairbanks and Anchorage international airports have said they expect collective summer passenger capacity across airlines to be in line with or even exceed 2019 levels, partly due to the fact that it’s unclear at this point whether cruise ships will be allowed to sail to the state this summer.

Alaska Airlines averaged 12,472 full-time equivalent employees during the quarter, down more than 25 percent from a year ago. Its operating fleet also shrunk by 24 to 201 aircraft over the year.

Air Group held $3.5 billion in cash and other liquid assets at the end of the first quarter and more than $5.3 billion in total liquidity, according to the earnings report. Company executives have stressed their ability to rely on what was a very strong balance sheet to ride out the pandemic despite being in an extremely volatile industry.

Air Group received $546 million in Treasury Department loans and grants during the quarter and is eligible for another $584 million in the third round of Payroll Support funding, according to a company statement.