Alaska Air’s cash burn rises as more cuts loom
Alaska Air Groupit’s (ALK -0.17% ) Cash burn increased in September compared to August and is expected to increase further in October, but the airline is taking steps to cut costs to weather the coronavirus crisis.
In a regulatory filing on Tuesday, Alaska Air said cash burn in September rose to $117 million as improved cash bookings failed to offset additional extra flights and increased payouts. title of debt service. The company expects to spend $125 million in October, which assumes flight demand will improve slightly in the month.
Airlines have been losing money since the start of the coronavirus pandemic. With travel demand expected to take years to return to normal, companies are scrambling to cut costs.
Alaska’s total revenue for September was down 66% year-over-year, higher than August’s 72% decline. The airline expects flights to be down around 40% in the fourth quarter from a year ago, but admitted that estimate may not hold.
“The health and economic crisis resulting from the COVID-19 outbreak has had an unprecedented impact on our business,” the airline wrote in the filing. “We don’t know what shape the recovery will take and we are continuously monitoring demand trends to determine our capacity decisions as the situation evolves.”
On October 1, the company laid off around 400 employees, mostly flight attendants, but was able to avoid larger furloughs as more than 4,000 workers accepted extended furloughs.
As of October 9, the airline had cash and cash equivalents totaling $3.6 billion. Alaska Air in September finalized an agreement with the US Treasury to borrow up to $1.9 billion under the CARES Act, and has so far withdrawn $135 million of that total.
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