Alaska Air Group provides update on long-term growth strategy
Company to host Investor Day in
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- Adding depth to our expansive network: Alaska plans to grow an average of 4-8% per year through 2025, in part by investing in the depth of its network.
Alaska's1,200 flights per day take our guests to 120 destinations across North and Central America, including nonstop flights to transcontinental business routes and four Hawaiian Islands. Alaska'snetwork has consistently produced industry-leading margins throughout its history and its measured approach to bringing capacity back post-pandemic enabled a return to profitability ahead of the industry. Together with the airline's global partners in the oneworld® Alliance, guests can reach over 1,000 destinations while earning and redeeming miles on flights to locations around the world.
- Operating a single, more efficient fleet: Today, the company will share plans to accelerate the transition of its fleet of 300+ aircraft to all-Boeing 737 for its mainline operations and all-Embraer E175 jets for regional, by the end of 2023. Consistent with
Alaska'slow-cost high productivity mindset, these transitions are expected to drive significant economic benefits. As the fleet grows to 400 aircraft by mid-decade, these will manifest through operational simplicity, flexibility and scalability, better fuel efficiency and reduced maintenance costs. The company is also growing cargo business operations by converting two passenger 737-800s to freighters, bringing the total freighter fleet to five.
- Delivering best-in-class care: Care is the foundation of
Alaska'sculture, fueled by its people and reflected in everything they do. It has earned the airline high guest satisfaction and long-term loyalty. The company will continue to invest in developing its people through its Pathways program, which cultivates talent from regional to mainline operations. In addition, it is developing the next generation of pilots and training existing employees for new jobs through its Ascend Pilot Academy. The company is also committed to making measurable progress on initiatives to advance diversity, equity and inclusion.
With care central to everything
Alaska Airlinesdoes, the company will continue to invest in end-to-end guest experiences that deliver on its brand promise. Today, the company announced infrastructure improvements for four of its main hubs – Seattle, Portland, San Franciscoand Los Angeles. These investments total $2.3 billionin infrastructure upgrades that 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.
Alaska'saward-winning loyalty program with a renewed co-branded partnership: Alaskaand Bank of Americatoday announced an extension of their co-branded credit card agreement through 2030. This agreement will enhance benefits for guests and drive improved profitability for the airline. Alaska'sMileage Plan™ is the industry's most generous loyalty rewards program, with miles earned based on flight distance rather than dollars spent and ability to earn and redeem to over 1,000 global destinations as part of oneworld Alliance. Alaska'sco-branded credit card with Bank of Americacurrently offers cardholders Alaska'sFamous Companion Fare™, free checked bag, the opportunity to earn 3x the miles on eligible Alaskapurchases, 50 percent discount on day passes for Alaska Loungeaccess, 20 percent back on all inflight purchases and many other travel benefits.
- Preserving a resilient business model for long-term value creation:
Alaska'slegacy of industry outperformance is guided by strong principles for management and performance. Today, the company published the guidelines that drive its financial sustainability and performance, providing additional transparency around its financial management principles and capital allocation approach. Key components include:
- Generating returns on capital that consistently exceed the industry and the company's cost of capital
- Managing the business and allocating capital with a long-term perspective and a consistent set of priorities
- Placing a high value on producing free cash flow consistently and sustainably
- Sustainable on all fronts:
Alaska'scommitment to long-term value includes prioritized ESG commitments to increase diversity at all levels, to reduce the company's impact on the climate, and to provide transparent accountability on key environmental, social and governance parameters. Last year, the airline set ambitious, but attainable sustainability goals, including being the most fuel-efficient U.S.airline and reaching net-zero carbon emissions by 2040. Further embedding these commitments into its culture, Alaskahas linked a portion of its annual performance-based pay plan for all employees to the carbon intensity of the operation, and a portion of executives' compensation to achieving stronger BIPOC representation in leadership.
As detailed in the company's fourth quarter 2021 and full-year results,
Up 1% to 3%
(Excluding fleet transition costs and lease return expense)
Up 3% to 5%
*Range increases are compared to 2019 levels
This presentation may contain forward-looking statements subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. These statements relate to future events and involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different from those indicated by our forward-looking statements, assumptions or beliefs. For a comprehensive discussion of potential risk factors, see Item 1A of the Company's Annual Report on Form 10-K for the year ended
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Media Contact: Media Relations, (206) 304-0008, Newsroom@alaskaair.com; Investor / Analyst Contact: Emily Halverson, Managing Director, Accounting & Investor Relations, Emily.Halverson@alaskaair.com