Alaska Would Like Delta and United to Show Some Respect
The airline reminds you that there are three — not two — U.S. airlines at the top of the profitability heap.
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Dear readers,
United and Delta would like to convince you that they're the only two U.S. airlines capable of succeeding in today's climate. But Alaska continues to post stellar results compared to industry laggards; for example, a 15.8 percent second quarter adjusted pretax margin, which CEO Ben Minicucci told analysts likely will lead the U.S. industry and “[differentiate] us from other domestic-focused peers in terms of profitability."
Like Delta and United — the only other two airlines to report second quarter earnings so far — Alaska used its July 18 earnings call to highlight a glut of domestic capacity that has affected its pricing power on some routes. It’s why Alaska’s second quarter PRASM decreased 4 percent year-over-year, while net income fell $20 million to $220 million. We’ll have to wait a couple of weeks to know for sure, but I suspect that these numbers will be far better than numbers the other domestic-centric airlines will report.1
You probably know why Alaska is different. While Alaska remains at its core a LCC, it’s also a premium-focused airline with a robust corporate travel business. And both of those sectors are growing, even if managed travel has a long way to go to match 2019 volumes.