Emphasizing Alaska Airlines’
and Horizon Air’s work to “weatherproof” themselves from economic
downturns and instability, Chairman and CEO Bill Ayer told shareholders
today at the Alaska Air Group annual meeting that considerable progress
has been made to streamline costs, enhance value to customers and improve
operational performance. Ayer tempered his remarks to the audience at Seattle’s Museum of Flight by
saying “This is a work-in-progress—we have a way to go to ensure
long-term security and prosperity for our employees and shareholders.”
The initiatives necessary to get there are outlined in “Alaska 2010,” a
plan Ayer unveiled nearly a year ago to secure $307 million in permanent,
annual savings from Alaska’s cost structure. The savings would result from
a combination of improvements: in efficiency and effectiveness, product
changes, and market-based adjustments in wages, benefits and work rules.
Alaska is more than a third of the way there already and remains on course
to achieve annual savings of $150 million by year-end.
Achieving the full amount will reduce Alaska’s non-fuel unit cost to 7.25
cents per available seat mile—more than a full cent lower than where
Alaska concluded 2003 and a level Ayer says will allow Alaska to fly
profitably to almost any major market in the nation.
“With that cost structure, we could comfortably grow 8-to-10 percent per
year,” he said. “At that point, success becomes self-reinforcing, because
consistent profitability allows you to grow and growth helps keep costs
Despite the airline industry’s travails and the challenges facing both
Alaska and Horizon, Ayer said, “We have the right plan. Our commitment is
strong. Our people are caring and resourceful with a record of excellence.
They are definitely up to the challenge.”
In other news, Ron Cosgrave, Alaska CEO from 1972-79, retired from the
board of directors after 33 years of outstanding service. Cosgrave led the
rescue of the airline from near-bankruptcy and built the foundation for
the national prominence that the airline enjoys today.
In addition, shareholders re-elected four board members to new three-year
terms: Ayer; Dennis F. Madsen, president and CEO of Recreational Equipment
Inc; R. Marc Langland, president of Anchorage-based Northrim Bank; and,
John V. Rindlaub, CEO of Wells Fargo Bank’s Pacific Northwest region.