Brad Tilden was a few months away from retirement, ready to leave a thriving Alaska Air Group to his anointed successor, when the COVID-19 pandemic struck the airline industry. Almost overnight, the Seattle-based airline’s passenger count dropped from 130,000 people carried every day to just 4,000.
“It was very scary. We lost $450 million in 30 days,” said Tilden. “For 55 days, we had more cancellations than new ticket sales.”
Even for Tilden, known for his boyish optimism and sunny smile, it was a crushing development. Alaska Chief Financial Officer Shane Tackett said Tilden’s “emotional curve was as acute as I’ve seen it, lower than I’ve ever seen.”
“But he’s an eternal optimist. He doesn’t live in the doldrums very long,” Tackett added. “He’ll come back with renewed spirit and energy and a basic confidence that if you keep working, you’ll ultimately get on a good path.”
Tilden led daily crisis meetings of his executive team, including his designated successor, company president Ben Minicucci, and postponed his retirement to focus on saving the company.
That final task seems close to accomplished now.
On Tuesday, Tilden was welcomed with a torrent of enthusiasm and peppered with questions when he dropped in without notice on a training class for about 50 flight attendants renewing their certification at the airline’s training center in SeaTac.
Tilden told them Alaska’s flights are now up to half of the pre-COVID 2019 passenger level, as vaccinations raise people’s spirits and they begin to think of summer travel. And future ticket bookings for the months ahead are at 70% of the 2019 level.
“I think we are going to have a pretty good summer,” Tilden said to the flight attendants. “Right now, it feels like we have a lot of momentum.”
Having turned 60 in December, Tilden is finally walking off to his delayed retirement. Though he’s officially CEO until the end of the month when Minicucci takes over, Wednesday was his last day in the office.
Catching the aviation bug
Tilden’s father, a Boeing engineer who worked on space projects, was transferred from Huntsville, Ala., to Seattle when his son was 13. Tilden caught the aviation bug here as a young man.
While doing his accounting degree at Pacific Lutheran University in Tacoma, Tilden got a summer job as a train attendant for Amtrak that for the first time put some excess money in his pocket. One day that summer, he drove past Renton airport and saw a sign offering an “introductory flight” for $20.
The day after taking that first flight, he came back and booked flying lessons. He had his private pilot’s license by the end of the following summer.
Tilden has been flying small private planes ever since. For one of his retirement projects, he’s helping build a two-seater Carbon Cub, a light, powerful sport plane for backcountry flying that he’ll fly to places like Johnson Creek in Idaho where he can land on a grass strip and camp.
Tilden joined Alaska Airlines in 1991 from accounting firm Price Waterhouse and nine years later was promoted to chief financial officer. He was appointed president of the airline in 2008 and became CEO in May 2012.
In that time he has transformed the airline, initially through aggressive internal growth and then in 2016 by acquiring California-based Virgin America.
And until the pandemic struck, Tilden also delivered consistent profitability.
During his tenure as CEO, up to the 2019 pre-COVID mark, the airline doubled in size both by revenue and number of employees. Profits almost tripled and the stock price quadrupled.
It aggressively added more flights to Hawaii, more transcontinental flights, more flights to vacation spots in Mexico.
Tilden said he pushed for the acquisition of Virgin because “we didn’t want to get acquired” and he believed that meant Alaska had to get bigger. With the airline very strong in Washington, Oregon and Alaska, the clear path to growth was expansion in California.
Cutting costs while retaining service
This was accomplished as intense competition from low-cost airlines forced Alaska to change its business model and become low-cost itself — a shift that has turned off some longtime Alaska fans, annoyed by the fees slapped on for bags and legroom.
Mark Eliasen, a former vice president of finance at Alaska, recalls that “there was a time when Alaska aspired to be the Nordstrom of airlines, the place you love for the service and are willing to pay a little more.”
“Brad was the prime architect of turning the company away from that,” said Eliasen. “We had to explain to employees that it’s not a viable business strategy.”
CFO Tackett said Tilden “operates from a people-first perspective… But he also understands you’ve got to make the tough decisions in that role.”
Tilden says he sought to create a financially solid airline while at the same time retaining Alaska’s reputation for warm service. He knew passengers were no longer willing to pay high fares. He had to figure out what they want and are willing to pay for.
He thinks of Costco as a model, a company that “sells high quality products delivered really, really efficiently.”
So for example, instead of serving free meals, Alaska now sells popular food, wine and microbrews — or at least it did until the pandemic forced an end to food service for safety reasons.
When some in the flight attendant class Tuesday asked about the return of inflight food sales, Tilden noted that the food service doesn’t make much money for Alaska and that the airline does it because “it gives you guys a chance to interact with customers.”
“Without that, they don’t love us as much,” he told them. “The magic of Alaska is what you guys do on airplanes.”
Still, his leadership also delivered a constant push for cost savings to provide a sound financial base: a strong balance sheet, low debt levels and robust cash flow.
“All of our people are dependent on us running the business well,” Tilden said.
Partnering with Boeing
Tilden attributes part of Alaska’s success to its close relationship with Boeing.
Ray Conner, the former CEO of Boeing Commercial Airplanes who is now on Alaska’s board and who attended the same Highline High School as Tilden, recalled how when he was Boeing’s vice president of sales for North America, “it was my view the hometown airline should be treated as a special customer.”
“We were thinking of it not only as a partnership between Boeing and Alaska, but with the people of the Northwest and especially the people of Seattle and our employee base,” said Conner.
The relationship grew as Alaska began its fleet expansion and bought more Boeing planes.
“We could see it. Alaska was going to explode,” said Conner. “That’s why we wanted it.”
That relationship was strengthened when Alaska had to borrow $2 billion to close the acquisition of Virgin America in 2016. JetBlue, an all-Airbus airline, was the rival bidder for Virgin.
Conner said it wasn’t a hard decision to support Alaska. Boeing provided a $400 million loan, secured by Alaska’s existing commitments to purchase the 737 MAX.
“Everybody saw the reasoning behind it,” said Conner, who led Boeing Commercial at the time. “If Virgin is going to get sold, we’d want Alaska to be the one as opposed to JetBlue.”
Crises in the industry
Another reason for Tilden’s tight focus on the company’s financials was the certainty of airline downturns. The 9/11 terrorist attacks and the 2008 global financial crisis both hit air travel hard, yet Alaska emerged from each event stronger than it was before.
“This is a dynamic industry. It does seem to throw a crisis at you every three or four years,” said Tilden. “If you set the course right, you’ll be positioned to get through those shocks.”
“I’ve trained myself to look at it as good fortune,” he added. “To say, I’m lucky to be in this role, to be able to lead this fantastic team.”
The emotion of his pending departure momentarily catching him, Tilden’s voice cracked a little as he said this.
Interviews this week with a variety of current and former Alaska pilots and flight attendants produced a unanimous verdict that Tilden has been a terrific leader.
Carol Scallon, who has been a flight attendant at Alaska for many decades, got to know Tilden in his early years at the airline when he regularly flew back and forth between Seattle and Washington, D.C., on business — though he always sat in coach.
“I’ve worked for a lot of our CEOs,” Scallon said. “There’s no falseness in him. He’s a very special man.”
Steve Fulton, a veteran Alaska pilot, recalled how Tilden a couple of years ago, flying from Juneau into Gustavus, at the mouth of Glacier Bay in Alaska, heard Tilden’s voice over the radio.
Stopping for gas in his private plane, Tilden landed behind Fulton’s jet and immediately came over and chatted warmly with the pilots and cabin crew.
Tony Salmon, a former Alaska pilot who worked on the pilots’ union negotiating committee called Tilden “genuinely a good guy” and one who “has a better labor relations rapport than any of the other CEOs.”
Tilden earned total compensation in 2019 of $5.5 million. In 2020, he and Minicucci gave up their base salaries for six months from March to September. His final compensation for the year has not been filed yet.
Tilden leaves with a retirement pension valued at $4.7 million, according to company filings. On Friday, he exercised stock options and then sold them for a profit of $1.1 million that will fund a tidy retirement project.
As he departs, Alaska’s course seems set.
Minicucci said he’s worked with Tilden for all his 17 years at Alaska.
“Everything we’ve done, we’ve done together. All our values, the strategic course the airline is on, is based on things we’ve been working on for at least 10 years,” Minicucci said. “So no radical change in direction.”
Tilden, who will stay on as chairman, said he’ll step away from any day-to-day management to give Minicucci his chance to lead.
He foresees a continued expansion that will make Alaska a national force with continued growth connecting California to the Pacific Northwest and the rest of the country.
“We need to get bigger. There’s an energy around growing and always doing something: new markets, new airplanes,” Tilden said. “That needs to be our identity in the future.”
Correction: A previous version of this story mistakenly referred to the Carbon Cub as a turboprop. It is a prop plane with a piston engine.