Alaska Air Group is eliminating 200 jobs as the airline company faces an expected loss of nearly $700 million this year, citing high fuel prices and geopolitical pressures.
The company announced the layoffs on Friday, Oct. 30, with 125 of the affected employees based in Washington, according to a spokesperson.
All eliminated positions are non-union back-office roles. The cuts will not affect pilots, flight attendants, airport guest services workers, or employees in maintenance and engineering.
In a message to employees, CEO Ben Minicucci said the company needed to reduce overhead while continuing to invest in its operations and long-term priorities.
“To remain competitive and emerge from this challenging period stronger, we must continue investing in our fleet, guest experience, capacity and network.”
CEO Minicucci added:
“At the same time, we must return to the financial discipline that has long been a key competitive advantage. That means taking a hard look at overhead … and ensuring our resources are focused on the priorities that will strengthen our company for the long term.”
Alaska Air Group includes Alaska Airlines, Hawaiian Airlines, regional carrier Horizon Air and ground support company McGee Air Services.
The company reported a $416 million loss during the first nine months of the year, according to financial results released in October.
The figure marks a sharp reversal from the same period last year, when Alaska reported $79 million in profits. At the time, the company warned that elevated fuel expenses would continue affecting its financial performance.
With fuel costs running $1.8 billion above its original guidance for the year, Alaska projected a full-year loss of $5 to $5.50 per share.
The announcement follows an investor day in September, when company executives sought to reassure Wall Street about Alaska’s direction despite the financial pressure from higher jet fuel prices.
What happens to affected employees amid Alaska Air Group’s mass layoff?
The geographic impact of the layoffs extends heavily to Hawaii. Around 50 of the eliminated positions are based there, primarily affecting office staff at the Honolulu headquarters of Hawaiian Airlines, which Alaska recently acquired.
For all 200 affected employees across the company, their last official working day will be Nov. 13, but Alaska will continue to provide regular pay through Dec. 31, along with severance packages and job-placement support.
The job cuts underscore a deeper crisis hitting the entire airline industry. Continuing geopolitical tensions in the Middle East have led to soaring global energy prices, resulting in an aviation fuel shock.
This instability is affecting West Coast airlines in particular owing to constraints at the local refineries and a high dependence on foreign crude oil.
In the case of Alaska, costs related to fuel have increased to twice their initially estimated amount, thus overshadowing all the gains from consistent passenger numbers and 14% increase in revenue.
These financial problems have led the airline to reconsider its future goals. In September, when presenting the company to investors, the management announced a growth strategy named “Alaska Accelerate.”
The plan is based on increasing the amount of premium class seats, developing the airline’s loyalty program, and opening new non-stop international routes from Seattle.
Nevertheless, the management said that because of the ongoing fuel problem, Alaska Air would not be able to reach its profits goals.
With ongoing higher energy prices, the current budget deficit for this year will be the first annual loss for the state not during the pandemic in over 20 years.