Alaska Air's Cash Burn Ticks Higher as More Cuts Loom

Alaska Air Group's (NYSE: ALK) cash burn increased in September compared to August and is expected to grow higher still in October, but the airline is taking steps to bring down costs to weather the coronavirus crisis.

In a regulatory filing on Tuesday, Alaska Air said September cash burn increased to $117 million as improved cash bookings failed to offset incremental additional flying and increased debt service payments. The company expects to burn through $125 million in October, and that assumes that flight demand will improve slightly during the month.

An Alaska Air 737 on the runway.

Image source: Alaska Air Group.

Airlines have been losing money since the onset of the coronavirus pandemic. With travel demand expected to take years to return to normal, the companies are scrambling to lower costs.

Alaska's total revenue for September was down 66% year over year, which was better than August's 72% decline. The airline expects flying to be down about 40% in the fourth quarter versus last year, but admitted that estimate might not hold.

"The public health and economic crises resulting from the outbreak of COVID-19 has had an unprecedented impact on our business," the airline wrote in the filing. "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."

On Oct. 1, the company furloughed about 400 employees, mostly flight attendants, but was able to avoid more-significant furloughs because more than 4,000 workers agreed to extended leaves of absence.

As of Oct. 9, the airline had cash and equivalents totaling $3.6 billion. Alaska Air in September finalized an agreement with the U.S. Treasury to borrow up to $1.9 billion under the CARES Act, and so far has drawn $135 million from that total.

10 stocks we like better than Alaska Air Group
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Alaska Air Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of September 24, 2020

Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool recommends Alaska Air Group. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Latest Markets Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More