Demand, fares may support H2 cash flow despite fuel shock: Alaska Air

Chief Financial Officer Shane Tackett said fuel markets had become less volatile in recent weeks, but prices were still moving by about 5% over a couple of days

Alaska Air Group is hopeful it can reinstate its financial guidance on its second-quarter earnings call if fuel prices show more stability, Chief Financial Officer Shane Tackett told Reuters on Saturday, after volatility in jet fuel costs forced the carrier to pull its full-year outlook.

 

Tackett said fuel markets had become less volatile in recent weeks, but prices were still moving by about 5% over a couple of days, making Alaska unwilling to restore guidance until it has more confidence in the outlook.

 

"We want to see a little bit more stability in the backdrop," Tackett said on the sidelines of the International Air Transport Association's annual meeting in Rio de Janeiro.

   

The carrier expects a tougher second quarter than it had anticipated before the latest fuel shock, but Tackett said higher fares and resilient demand should help offset most of the hit in the second half. He said operating cash burn could fall to zero or turn slightly positive in the second half of the year.

 

Alaska borrowed $1 billion recently, split between secured and unsecured debt, but Tackett said the company was not planning another liquidity move or a rollback in capital spending.

 

Corporate bookings over the next 90 days are up 20% to 30% from a year earlier across most geographies and industries, he said.

 

Tackett said Alaska is also working with energy companies to source more jet fuel for the West Coast from markets such as Singapore, as refining margins in its core geographies remain elevated.

 

He said the carrier had no current plan to retire Hawaiian’s Airbus A330s or A321s and expects to be an Airbus operator "for a long time."  (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)