DALLAS – Alaska Air Group presented its long-term growth strategy at its Investor Day meeting today. Highlights by the group that runs both Alaska Airlines (AS) and Horizon Air included adding depth to its network, simplifying its fleet, and delivering best-in-class care.
Starting off the meeting was the announcement that yesterday Aviation Week Network’s Air Transport World (ATW) named Alaska the 2022 ATW Airline of the Year, the top honor awarded among the 48th Annual ATW Airline Industry Achievement Awards, citing the company’s unique strengths and leading performance.
“We’re honored to be recognized by Air Transport World as the Airline of the Year – a testament to our people and to everything they’ve accomplished through the last few tumultuous years,” said Ben Minicucci, Chief Executive Officer of Alaska Air Group.
“Throughout our history, Alaska has consistently outperformed the industry. We’re well-positioned to continue that trend, leveraging loyalty, alliances, network growth, and our brand to unlock significant value and deliver US$400m of incremental revenue as part of our 2025 strategic plan. We care about growth because it enables us to create value for all who depend on us. Greater opportunities for our employees, new jobs and increased service to our communities, and returns for our owners.”
Expanding Network with Single-type Fleet
Alaska plans to grow an average of 4-8% per year through 2025. It hopes to do this, in part, by investing in the depth of its network. Alaska’s 1,200 flights per day take passengers to 120 destinations across North and Central America. This includes nonstop flights on transcontinental business routes and to four Hawaiian Islands.
The Group says that its network has consistently produced industry-leading margins throughout its history, and it will continue to use its measured approach to bringing capacity back post-pandemic to enable a return to profitability ahead of the industry
Perhaps the biggest news of the day is the group’s decision to accelerate its transition to a single-type fleet. For all mainline operations, it will use the Boeing 737. For regional operations, the Embraer E175 jet will be the sole type by the end of 2023. These transitions should drive significant economic benefits.
As AS’ fleet grows to 400 aircraft by mid-decade, this change will manifest through operational simplicity, flexibility and scalability, better fuel efficiency, and reduced maintenance costs.
The company is also growing its cargo business operations by converting two passenger 737-800s to freighters, bringing the total freighter fleet to five.
Best In Class Care
In terms of Care, which the group says is central to its corporate identity, the group will continue to invest in developing its people through its Pathways program, which cultivates talent from regional to mainline operations. In addition, the Ascent Pilot Academy is developing the next generation of pilots and training existing employees for new jobs. The company is also committed to making measurable progress on initiatives to advance diversity, equity, and inclusion.
Also planned are investments in end-to-end guest experiences that deliver on its brand promise of Care. Infrastructure improvements for four of its main hubs—Seattle, Portland, San Francisco, and Los Angeles total US$2.3bn. These upgrades will provide a more seamless and enjoyable travel experience for guests and provide access to more gates and state-of-the-art lounges and lobbies.
The group is also working toward a resilient business model for long-term value creation. It will:
- generate returns on capital that consistently exceed the industry and the company’s cost of capital.
- Manage the business and allocate capital with a long-term perspective and a consistent set of priorities .
- Place a high value on producing free cash flow consistently and sustainably.
- Commit to sustainability on all fronts.
Featured image: Alaska Airlines. Photo: Brandon Farris