Alaska Air Group reported its first profit in three quarters yesterday, but the good news was overshadowed by continuing problems with late...
Alaska Air Group reported its first profit in three quarters yesterday, but the good news was overshadowed by continuing problems with late and canceled flights caused, in part, by low employee morale.
“I’m personally calling some of our most loyal customers, who are rightfully concerned about our recent operational problems,” CEO Bill Ayer told analysts during a conference call. “For the most part, they’ve been giving us the benefit of the doubt, … but the goodwill we’ve built won’t last forever in the face of ongoing operational problems.”
Ayer said the airline’s canceled flights and on-time performance last month were worse than in May, when the airline had the worst record for on-time performance among its peers. It tied for second-worst performance for flight cancellations.
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The U.S. Department of Transportation has not released figures from last month.
This month’s figures have improved, Ayer said, partly because Alaska pulled 16 daily flights from its schedule.
More than 60 percent of its flights have been on time this month, compared with about 50 percent last month, he said. Fewer than 1 percent of its flights have been canceled this month.
Alaska’s stock fell 77 cents yesterday to $33.45 a share despite its announcement of a second-quarter profit of $17.4 million, or 56 cents a diluted share, an improvement over the company’s net loss of $1.7 million in the same quarter last year.
After taking into account one-time items, Alaska fell 1 cent short of analysts’ expectations, according to Thomson Financial.
The company took a $9.2 million after-tax restructuring charge for employee severance and other costs associated with letting go 472 baggage handlers at Seattle-Tacoma International Airport.
On the conference call, Alaska executives discussed the low morale among employees, which seems to be causing some of the delays and cancellations.
Many unionized workers were upset when the airline let its Sea-Tac baggage handlers go in May. Its pilots and flight-attendants unions recently voted down tentative contract agreements.
Much of the labor turmoil happened at the same time Alaska and other airlines were adding flights and beginning to fill planes again.
“We were not prepared for the combined effect of changes across our company,” Ayer said. “The result has been operational performance that is well below our goal, and it falls short of what our customers have come to expect.”
Michael Paul of West Seattle is one such customer. A regular flier on Alaska Airlines for the past 15 years, he switched to Continental Airlines for his next flight to Anchorage because of problems at Alaska Airlines.
On a trip to Anchorage last month, the scheduled flight left Seattle nearly three hours late.
First, Alaska Airlines workers said a light bulb had burned out in a fasten-seat-belt sign.
Then they said the bathroom had a leak and the airline had trouble pressurizing the plane to fix it.
His return flight was only an hour late, Paul said, but he is waiting to see whether Alaska’s on-time record improves before stepping aboard their planes again.
“I am irritated,” he said. “I don’t have time to sit in either airport, in Seattle or Anchorage, if this happens again.”
Melissa Allison: 206-464-3312 or email@example.com