Alaska Airlines Doubles Down on Premium Seating, Expects to Take Hit From Flight Attendant Contract

Alaska Airlines is hoping to capitalize on the sustained demand for premium seats. 

CEO Ben Minicucci said the carrier will add six premium class seats to its Boeing 737-900ERs and Max 9s. He added that they are also adding four premium seats to their 737-800 fleet.

“I'm excited that we are making this investment as we continue to respond to guest preference and diversify our revenue base,” Minicucci said on a call with analysts on Thursday. 

Alaska reported a relatively strong second-quarter due to its premium seating and the return of business travel in its West Coast hubs. It also has fared much better than other more domestic-focused carriers in recent quarters. Miniccuci said premium products generated nearly $1 billion in revenue. The carrier reported a record second-quarter revenue of $2.9 billion. 

Corporate revenues for Alaska were up 24% in the second quarter compared to the same time last year. Chief revenue officer and chief commercial officer Andrew Harrison said the increase was driven by the tech industry and overall business travel volumes are currently 85% recovered. 

“Our managed corporate business travel remains solid throughout the quarter following the significant step-up we experienced at the beginning of the year,” Harrison said. 

Alaska Cautious on Q3 Outlook as It Finalizes Flight Attendant Contract

Alaska recently reached a tentative agreement with its flight attendant union after months of contentious negotiations. The tentative contract would give flight attendants an average pay raise of 32%. 

Chief financial officer Shane Tackett said the carrier expects the deal to add more pressure to its bottom line in the third quarter. Minicucci said Alaska was adjusting its full year earnings per share guidance by 25 cents per share to account for the deal. Alaska was previously expecting its full year earnings per share to range from $3.25 to $5.25. 

Alaska is one of two major airlines to have achieved a tentative deal with its flight attendants. Southwest Airlines flight attendants also scored a contract that would see them receive 22.3% raises. 

Meanwhile, flight attendants at American Airlines and United Airlines are still in talks over a new contract. American’s flight attendants’ union at one point told its members to be prepared to strike. United flight attendants are set to vote on whether to authorize a strike. 

A Timeline on the Alaska-Hawaiian Merger

It’s possible a decision from the Justice Department on the proposed merger between Alaska and Hawaiian Airlines could come soon. 

Minicucci said Alaska submitted the DOJ’s second request for information and that the department plans to finalize its review process by August 5. The DOJ previously sued to block the proposed merger between JetBlue and Spirit Airlines, arguing that a combined airline could raise fares. 

The Alaska CEO has previously said he’s confident the DOJ would greenlight the Hawaiian merger. 

“Our deal is completely different,” he said at an industry event in March. “We’re actually the low-cost, low-fare airline acquiring Hawaiian.”