Alaska Airlines is proving that in the post-Sept. 11 airline industry, it helps to have some northern exposure.
Although most carriers have made massive cuts to weather the plunge in air travel, Alaska has made only moderate trims in service because demand for its flights is holding up fairly well.
With its routes concentrated in the Northwest and West Coast, the airline expects to be back to full strength next month and will even expand a bit later this year.
Alaska's Seattle-based parent company, Alaska Air Group Inc.--which also runs the short-haul regional carrier Horizon Air--has not laid off any of its 11,000 employees, while the rest of the industry slashed roughly 100,000 jobs.
"That's all this business is, is people," said Alaska Chairman and Chief Executive John F. Kelly. "We looked at layoffs. They're not going to save any money; they're just going to upset people's lives."
But Alaska's decision to stay the course is risky. By keeping its service largely intact, the nation's ninth-largest airline is losing money like nearly every other carrier.
Southwest Airlines, the leader in providing low-cost, low-fare service, is the only major carrier that has neither cut back service nor laid off anyone since Sept. 11, and it's barely profitable.
Kelly is betting that Alaska, by holding its expenses in check, can keep its full network and recover financially when the airline business starts to improve later this year, as many expect.
"In our profit-planning and budgeting for 2002, we're really trying to sharpen the pencil," Kelly, 57, said in an interview.
Some analysts say the strategy could work. Alaska's passenger traffic "is still strong enough" to warrant keeping its schedule full, especially because some competitors "have been cutting back," said Betsy Snyder, an analyst at Standard & Poor's Corp. in New York.
"Look at the Shuttle by United, which was a major competitor, and now it's gone," she said, referring to the decision by United's parent, UAL Corp., to abandon the West Coast shuttle after Sept. 11.
"With the big guys cutting back capacity, it's giving the smaller guys like Alaska opportunities," she said.
Alaska, known for its Eskimo logo that adorns the tails of its 102 planes, serves nearly 80 cities domestically--including Los Angeles, Burbank and San Diego--and in Canada and Mexico. It flies up and down the West Coast and although Seattle is its hub, it has 31 daily departures out of LAX.
