Alaska Air Group Inc. forecast fourth-quarter capacity to be down about 40% and said more than 4,000 employees, including pilots and mechanics, took extended leaves as it expects to slash capacity further into next year.
“We are uncertain what shape the recovery will take, and we are continuously monitoring trends in demand to determine our capacity decisions as the situation unfolds,” Alaska
said in a filing Tuesday.
As of Oct. 1, about 400 employees, mostly flight attendants, were furloughed involuntarily, the airline said. Many of these employees could be recalled by the end of the year, Alaska said.
In total, the early-out and incentive leaves and other costs will result in a one-time cost of around $320 million, recorded in the third quarter, the company said.
Alaska is expected to report third-quarter results Oct. 22; analysts polled by FactSet expect an adjusted loss of $3.02 a share on sales of $686 million, contrasting with adjusted profit of $2.63 a share on sales of $2.4 billion in the year-ago quarter.
Its September cash burn was about $117 million, higher than its August cash burn due to additional spending and increased debt service payments, offset by improved cash bookings, Alaska said in the filing.
October cash burn will be around $125 million, it said.
Alaska in late September closed a deal with the Treasury Department to borrow up to $1.9 billion under the CARES Act, and has drawn $135 million to date. The remaining amount is available to draw through March 31, the company said.
Alaska shares were flat in the extended session Tuesday after ending the regular trading day down 1.1%. The stock got an upgrade to buy from analysts at Susquehanna this week.