Summary
- 2Q2024 numbers show Alaska Airlines is increasing premium seats annually and maintaining strong revenue growth.
- CEO Ben Minicucci believes Alaska’s 15.8% pre-tax margin leads the industry, edging out competitors like United.
- Alaska adding more premium seats on its 737s to meet increased demand and grow its product.
This week, Alaska Airlines announced its second-quarter results and doubled down on its strategy to focus on premium customers, adding 1.3 million premium seats annually to its 737s. Despite posting record quarterly revenue, the results are pretty bland, with low single-digit revenue growth and a 15% decline in net income compared to the same period in 2023.
What the numbers say
In the second quarter (2Q2024), Alaska Airlines (Alaska) carried 11.9 million passengers, generating total operating revenue of $2.9 billion, pre-tax income of $316 million and adjusted net income of $327 million. Compared to the second quarter of 2023, Alaska Airlines (Alaska) increased passenger numbers by 3%, total operating revenue by 2%, and adjusted net income fell by 15%.
Photo: Vincenzo Pace | Simple Flying
For the three months ended June 30, Alaska reported an adjusted pre-tax margin of 15.8%, which CEO Ben Minicucci believes will lead the industry. On Wednesday, United Airlines reported an adjusted pre-tax margin of 12.1% on total operating revenue of $15 billion, and its CEO, Scott Kirby, predicted that margin would place United “near the top of the industry.”
Simple Flying reported yesterday on the moves by Alaska to add more premium seats on its three Boeing 737 variants, the 737-800, 737-900ER and 737 MAX 9 jets. It is doing that to meet increased demand for premium seating and services, with First Class and Premium Class revenues rising by 8% and 6% in the second quarter.
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Alaska Airlines is taking advantage of the demand for more premium seating by offering its passengers enhanced seating choices.
Echoing that sentiment, Minicucci said it is clear that premium airlines are rising above the rest of the industry, and Alaska’s product and performance place it in that top tier, with a strong long-term outlook to grow and compete.
“That’s how we brought in record quarterly revenue and achieved a 15.8% adjusted pre-tax margin that should lead the industry. Thank you to our 23,000 employees for being safe, operating well, and taking care of our guests through our biggest summer travel season ever.”
Alaska reported a net income of $220 million in 2Q2024, which was boosted by a gain of $146 million on expenses classified as Special Items—Operating. While that gain was offset by $39 million in associated costs, the net effect was to increase the adjusted net income to the $327 million reported above.
Photo: Wangkun Jia | Shutterstock
The Special Items included costs associated with the retirement and disposition of Airbus and Q400 aircraft, retroactive pay for labor agreements with flight attendants and pilots, integration costs associated with the proposed acquisition of Hawaiian Airlines, and litigation costs related to the trademark dispute with the Virgin Group.
Second quarter highlights
In 2Q2024, Alaska received six 737 MAX 9s and three 737 MAX 8s, bringing the total within the fleet to 70 737 MAX 9s and four 737 MAX 8s. It also inducted one Embraer E175, bringing the total in the Horizon fleet to 44. At the end of June, the group had an operating fleet of 306 aircraft, including aircraft owned and leased by Alaska and Horizon and aircraft operated by third-party regional carriers.
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Operating under combined ownership will allow the carriers to optimize aircraft usage and expand their domestic and international networks.
Alaska Air Cargo added a second 737-800 freighter and expanded the cargo network with twice-weekly service to Los Angeles. The airline purchased a 600,000-square-foot facility in Renton, Washington, to be the new home for its training programs and operational teams when renovations are completed in 2025.
Alaska also announced 20 nonstop routes to its winter schedule, including new Vail, Colorado, La Paz and Monterrey, Mexico services. It also added its 55th nonstop destination from Portland with a seasonal service to New Orleans that begins in January 2025.
In good news for international travelers, Alaska expanded its partnership with British Airways, allowing customers to book nonstop flights between London and multiple US cities via the Alaska website or app.