Alaska Airlines is cutting jobs, flights

Alaska Airlines will slash its winter flight schedule — and its work force — after high fuel prices and the weak U.S. economy have caused it to lose tens of millions of dollars in the first half of this year.

The union representing Alaska's pilots criticized the decision, contrasting the planned cuts with the airline's expansion push while many competitors were struggling in the months after the Sept. 11 terrorist attacks.

Starting in November, the Seattle-based airline will reduce its capacity by about 8 percent, eliminating some flights to popular destinations in California and Mexico and canceling low-demand flights.

And the company announced Friday that it will cut its work force by 850 to 1,000 positions (9 to 10 percent) starting in November and continuing into 2009.

Jobs being eliminated include up to 190 pilots, 350 flight attendants, 35 mechanics, and 410 reservations, customer service and ramp agents Alaska said in a regulatory filing. The company said it's too early to estimate severance costs or how many jobs will be lost in the Seattle area, where it currently employs 5,600 workers, or about half its work force.

"The one-two punch of record oil prices and a softening economy, on top of increased competition, has burdened Alaska Air Group with a $50-million loss on an adjusted basis for the first half of this year. That demands decisive action to ensure the viability of our company," said Bill Ayer, chairman and CEO of Alaska Air Group, the parent company of Alaska Airlines and Horizon Air, in a statement Friday.

"We are changing our schedule to make sure we're flying the right routes with the right frequency and right aircraft. Regrettably, a reduced schedule means we need fewer employees."

Alaska said it is working with employees' unions to offer "early-out" programs and leaves of absence to minimize the number of involuntary job losses.

The airline cut 80 management jobs this summer.

Its much smaller sister airline, Horizon Air, also is reducing flights and staff. Horizon already has eliminated some regional flights and expects to shrink its capacity by about 20 percent in the fourth quarter compared to the same period last year. Some managers and pilots already have lost their jobs; about 40 pilots will be furloughed in November.

The union representing the 1,500 pilots at Alaska, the Air Line Pilots Association (ALPA), issued a statement criticizing the timing of the move just as oil prices have begun to fall.

Capt. Bill Shivers, chairman of ALPA's Alaska Airlines unit, said the carrier should take advantage of its relatively strong financial position during the current squeeze to position itself for expansion into new markets as other airlines falter — just as it did in the downturn after the attacks of Sept. 11, 2001.

"We are concerned that ... Alaska Airlines will reduce its pilot ranks so severely that our management will create a situation in which our carrier will be unable to ... respond to opportunities to grow as other airlines cut routes and capacity," Shivers said.

Alaska Airlines' cutbacks come as carriers across the country eliminate flights and employees to cope with high fuel prices and a decrease in domestic passengers due to the struggling U.S. economy.

The eight biggest U.S. airlines are grounding about 465 planes and trimming about 26,000 jobs, Bloomberg News reported.

Last week, Rob Spingarn, an analyst Credit Suisse, warned investors that after the peak summer-travel season, this fall will be "crunch time" for the airlines.

"We expect a significant step up in negative airline news and airline failures," Spingarn wrote.

The International Air Transport Association (IATA) last week forecast that the global airline industry will post losses totaling $5.2 billion in 2008.

The cuts in capacity could reduce the urgency of Alaska's fleet renewal. The airline still has 22 Boeing 737s on order.

But it has already swapped out all its older MD-80s for the more fuel-efficient new jets, so it could try to slow some of those deliveries or at least be content with the slowdown forced by the Machinist strike at Boeing.

Alaska spokeswoman Caroline Boren said the airline has not asked Boeing for any deferrals yet, though "in this environment, it's always a possibility."

Six of seven deliveries of 737s planned for the rest of the year are on hold until the strike is resolved. One 737, originally scheduled for delivery next week, was completed before the strike and is now expected to be delivered Sept. 30.

Among the flight cutbacks that Alaska will make:

• Canceling low-demand flights on Saturdays and holidays.

• Reducing flights — typically one round-trip a day — in markets with many daily flights, including Seattle-Bay Area and Seattle-Southern California.

• Operating certain flights between Portland and the Bay Area with smaller planes.

• Ending seasonal service on three Mexico routes, as previously announced, between San Francisco and Cancún, Mazatlán and Ixtapa/Zihuatanejo. Alaska will serve those destinations nonstop from L.A. and will continue to offer a seasonal nonstop flight between Seattle and Cancún.

• Last month Alaska dropped flights between Portland and Orlando and between Vancouver, B.C., and San Francisco. It continues to fly two daily roundtrips between Seattle and Orlando.

Alaska Air shares fell 58 cents, or 2.4 percent, to $23.19 Friday and are down 7.3 percent so far this year.

Seattle Times reporters Kristin Jackson,

Dominic Gates and Ángel González contributed to this report.