An article about Alaska Airlines appeared in last week’s Los Angeles Times that I think is worth a read. It quotes CEO Bill Ayer as basically saying Alaska is not for sale nor interested in a merger, effectively shunning away any courtship attempt from another carrier or entity. They do have codeshare arrangements with both American Airlines & Delta Air Lines, but Ayer’s goal is to stay independent.
Speculation has been frequent by analysts that Alaska would be an ideal acquisition for a number of large carriers, including American, Delta & US Airways, as well as other midsize carriers such as Frontier, Hawaiian, JetBlue & Spirit. According to Ayer again though, while Alaska knows growth is essential for its continued success (telling investors to expect 3% to 6%), it can do so by adding frequency in some of the markets it currently only serves once or twice a day. The carrier for the foreseeable future is staying away from the recent trend of mergers in the industry.
Financially, Alaska is doing quite well and posted a net income of $29.5 million ($74.2 million GAAP) for the first quarter of 2011. Its stock price is strong when compared against the industry, too, and the company would be valued as being worth $2.5 billion dollars on that basis alone. Scott Kirby, President of US Airways, acknowledges Alaska’s success and even points out that a merger between the two would, “take a cost structure that’s profitable and make it unprofitable.”
Still, though, from a route perspective I can see why investors would find the marriage of Alaska and other midsize airlines attractive, making such a combination into another large U.S. carrier to compete with the legacies domestically. Take a look at the route maps of Alaska (ex-Seattle), Frontier (complete route map) and JetBlue (ex-New York/Boston).
Also from what I’ve seen, Alaska receives fairly high marks in customer satisfaction, and will very soon have fleet-wide Wi-Fi capability given a tweet I saw from them on Friday. I’ve never flown with Alaska, but did have good experiences when I’ve flown subsidiary Horizon Air in the past. In a shrinking industry through consolidation, it was interesting to read the remarks from an airline CEO decisively against mergers… for now.