EXHIBIT 99.1
Contact: Lou Cancelmi -or- Sam Sperry
206-392-5170 206-392-5038
FOR IMMEDIATE RELEASE September 9, 2004
ALASKA AIRLINES MAKES WIDE-RANGING CHANGES
TO RETURN TO STRENGTH; MUCH WORK WILL BE CONTRACTED OUT
SEATTLE -- As part of an ongoing effort to improve its competitive
standing in the post-9/11 airline industry, Alaska Airlines today announced a
wide-ranging series of initiatives to streamline operations and enhance the
carrier's long-term viability. It comes on the heels of a management
reorganization that started last month.
Counting the management reductions, Alaska will be trimming nearly 900 of
its more than 11,000 employees. The collective savings is projected at between
$30 million and $35 million per year.
In many ways, Alaska is following an industry trend accelerated by the
rise of low-cost carriers: contracting out some of the work that up to now has
been accomplished in house.
"The permanent and dramatic changes in our industry have forced us to put
aside notions about how we've historically operated and to consider all
alternatives to improve our competitiveness," said CEO Bill Ayer. "The goal is
first to make sure that we survive, and then to emerge from the most difficult
period in the history of commercial aviation as one of the highest performing
airlines."
"Since 9/11, we've worked hard and taken great pride in our ability to
reduce costs without impacting people," Ayer added. "We've done this by
implementing more than $150 million per year in non-job related savings, found
largely through process improvements and technological advancements, plus
opportunistic growth into new markets. Unfortunately, changes in the competitive
and economic climate have continued at a rapid pace, requiring us to take even
stronger measures to secure our future."
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Here are the major changes:
- - Immediately closing the Oakland heavy maintenance base, which employs 340
people, and contracting out all heavy maintenance needs to Goodrich
Aviation Technical Services of Everett, Wash. and AAR Aircraft Services of
Oklahoma City, Okla. - two firms the airline already uses for about 60
percent of its heavy maintenance work. Contracting for heavy maintenance
is a practice employed in varying degrees by all of the nation's major
airlines. "Our Oakland mechanics are highly talented and have made great
strides over the past years by implementing new systems and processes,"
said Ayer. "They did their work very well. But the sobering reality is
that large-scale maintenance providers can give us the same excellent
quality at a lower cost."
- - Contracting for all fleet service functions -- the cleaning of aircraft
interiors between flights -- in Seattle, Anchorage, Fairbanks and Juneau.
The number of people impacted is 273, the vast majority in Seattle (158)
and Anchorage (93). Twelve more are in Juneau and 10 are in Fairbanks.
- - Closing ground support equipment and certain facilities maintenance
operations and hiring contractors to perform the work. "This is no
reflection on our people or their work. It's a question of cost," Ayer
said. This decision affects 60 facilities employees and auto mechanics at
10 stations (Seattle 30, Anchorage 14, Oakland two, Fairbanks two, Juneau
two and one each in Portland, Ketchikan, Sitka, Nome, Kotzebue and
Barrow).
- - Taking advantage of the respective strengths of Alaska and sister carrier
Horizon Air through greater sharing and shouldering of services where it
makes sense. Some of that will be behind the scenes with increased
collaboration in planning and accounting. And some of it will be more
visible. All customer service work in Spokane will be taken over by
Horizon and, in turn, Alaska will assume all of Horizon's ticket counter
work in Portland. These changes affect 30 Alaska employees in Spokane and
21 Horizon employees in Portland.
- - With just one flight per day in Tucson, Alaska will contract with a
third-party to fill customer service needs there. Thirteen employees will
be displaced as a result. Alaska also is making significant changes in how
it operates at Prudhoe Bay, triggering five layoffs there and a cut in
hours for the remaining 15 people.
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- - Closing three city ticket offices -- in Juneau, Anchorage and Bellevue.
This will displace nine customer service agents.
- - Closing the four-person pilot crew scheduling office in Los Angeles and
consolidating the work at a larger scheduling office in Seattle.
"While the guiding principles for these decisions are to maintain high
quality at a lower cost, our values of integrity and caring guide us on how we
treat people leaving the company," Ayer said.
For those employees impacted, Alaska has talked with union leadership about
the possibility of offering one of the most generous financial and job-finding
assistance packages the industry has seen since 9/11 triggered more than 100,000
layoffs at other carriers. Alaska has offered an attractive voluntary severance
incentive to employees in the most-affected work groups in the hopes of
minimizing involuntary departures by creating openings elsewhere in the system.
Ayer said Alaska will continue to look at every possible way to improve its
cost structure and competitive standing. The aim, he said, is to be an airline
where jobs and retirements are secure and career advancement opportunities
abound, as well as an airline that provides great value for customers and a
solid return for shareholders. And all of that will only be possible if we
complete our transformation and are able to weatherproof ourselves from the
inevitable ups and downs of the economy."
Alaska Airlines and its sister carrier, Horizon Air, serve more than 80
cities in Alaska, the Lower 48, Canada and Mexico. For more news and
information, visit the Alaska Airlines Newsroom on the Internet at
http://newsroom.alaskaair.com
This release may contain forward-looking statements that are intended to
be subject to the safe harbor protection provided by Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
These statements relate to future events or future financial performance and
involve known and unknown risks and uncertainties that may cause actual results
or performance to be materially different from those indicated by any
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "forecast," "may," "will," "could," "should,"
"expect," "plan," "believe," "potential" or
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other similar words indicating future events or contingencies. Some of the
things that could cause actual results to differ from expectations are: economic
conditions; the continued impact of terrorist attacks, global instability and
potential U.S. military involvement; the company's significant indebtedness;
downgrades of the company's credit ratings; the competitive environment and
other trends in the company's industry; changes in laws and regulations; changes
in the company's operating costs including fuel; changes in the company's
business plans; interest rates and the availability of financing; liability and
other claims asserted against the company; labor disputes; the company's ability
to attract and retain qualified personnel; and inflation. For a discussion of
these and other risk factors, see Item 1 of the company's Annual Report on Form
10-K/A for the year ended December 31, 2003. All of the forward-looking
statements are qualified in their entirety by reference to the risk factors
discussed therein. These risk factors may not be exhaustive. The company
operates in a continually changing business environment, and new risk factors
emerge from time to time. Management cannot predict such new risk factors, nor
can it assess the impact, if any, of such new risk factors on the company's
business or events described in any forward-looking statements. The company
disclaims any obligation to publicly update or revise any forward-looking
statements after the date of this release to conform them to actual results.
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