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Alaska: Corp. Travel Demand Recovering But ‘A Little Choppy’

Alaska Air Group’s second-quarter business travel revenue fully recovered to 2019 levels, executives said during an earnings call Thursday, boosted by higher fares. Business travel volume has reached about 75 percent to 80 percent of 2019 levels, and the carrier expects further growth, EVP and chief commercial officer Andrew Harrison said, but described those volumes as “a little choppy.”

The company posted its highest quarterly revenue in the second quarter, fueled by retirement volumes that Harrison said were “above 2019 levels.” Harrison said he expected more business travel to recover, and noted that both first-class and business-class revenue rose about 30 percent from the first quarter.

The technology industry, a key component of Alaska’s business travel volume due to its West Coast prominence, lags significantly in volume, Alaska CEO Ben Minicucci said.

“In terms of our network, technology has probably been the weakest, frankly,” Minicucci said, noting that its preferred partner status with American Express Global Business Travel and its alliance with American Airlines have helped business travel volumes, “but the technology sector still has a way to recover. .”

Minicucci said Alaska is “hiring at a rapid pace and consistently meeting our hiring goals,” but cited pilot attrition challenges at Alaska Airlines and regional subsidiaries Horizon and SkyWest.

Citing staffing challenges and continued supply chain disruptions, Minicucci said “we will be more conservative in our operations and capacity planning until we have a higher level of stability and predictability.” Alaska’s third-quarter capacity will be 5 percent to 8 percent below 2019 levels, and full-year 2022 capacity will be 8 percent to 9 percent below.

Results and predictions

Alaska Air Group’s second-quarter passenger revenue rose 79 percent year over year to about $2.42 billion. The company reported net income of $139 million, down from $397 million a year ago. Total operating revenue rose 74 percent year over year to $2.66 billion. The carrier’s second-quarter fuel costs rose to about $776 million from $274 million a year earlier.

The company estimates third-quarter revenue growth of 16 percent to 19 percent from 2019 levels, with fuel costs estimated at $3.79 to $3.89 per gallon.

Related: Alaska Air Group Q1 Earnings

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