Alaska likely to cut California frequency

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While Alaska Air Group executives are declining to provide specifics about forth quarter capacity cuts, it appears west coast frequency will be trimmed.

After posting a $14.1 million loss for the second quarter, Alaska announced a 5% drop in mainline capacity from 2007 levels during the fourth quarter; capacity for 2009 is expected to fall by 5% to 10%, compared with 2008.

“Capacity in California needs to come down,” Alaska executive VP finance, planning and CFO Brad Tilden said during a call with investors today. “As Bill [Ayer, Alaska CEO] said, we’re going to take a shot here, but we’re going to keep a good eye to maintaining the market share, so, we’re looking at proportional cuts.”

The company offers roughly 80 daily flights between Seattle and California as well as 35 to 40 daily flights between Portland, Oregon and California.

One or two flights between city pairs could be nixed, an Alaska executive says.

The carrier’s 15 daily Seattle-Los Angeles flights could fall to 14 or 13 in a softening economy during slower winter months while still maintaining pressure on Virgin America, Alaska executive VP flight and marketing Gregg Saretsky says.

Demand on Alaska’s routes has not fallen as much as executives expected following Virgin America’s entry into the Seattle-San Francisco market on 18 March and the Seattle-Los Angeles market on 8 April, he says.

However, Seattle-Southern California flights are experiencing some softness, whereas Seattle-San Francisco Bay area flights-despite a 10% capacity increase-are performing strongly, Saretsky says, adding Bay area unit revenues are increasing year over year while Southern California unit revenues are actually declining year over year.

More details about reductions will be unveiled in September, at which time the Seattle company will also trim management positions at both its operating subsidiaries – Alaska Airlines and Horizon Air.

Alaska management plans to reduce ranks by 5%, or about 80 jobs, effective 1 September.

Horizon, which reduced 75 management and staff positions year to date, will also trim operational and management positions.

Other staff level cuts have not been determined, and exact reductions will depend on how the schedule shakes out, an Alaska executive says.