Alaska Airlines to Disappear in 2015?
This Boeing 737-790 Aircraft operated by Alaska Airlines sports the Portland Timbers livery. Photograph ©2013 by Brian Cohen.
Will Alaska Airlines disappear as a brand in 2015?
Yes — at least, according to this article by 24/7 Wall St. which claims that Alaska Airlines will be one of ten brands predicted to disappear within 18 months when using a certain methodology applied with the following major criteria, including:
- Declining sales and losses;
- Disclosures by the parent of the brand that it might go out of business;
- Rising costs that are unlikely to be recouped through higher prices;
- Companies that are sold;
- Companies that go into bankruptcy;
- Companies that have lost the great majority of their customers; and
- Operations with withering market share.
The following text is what was specifically stated in the article pertaining to Alaska Airlines:
“Alaska Air Group Inc. (NYSE: ALK) is one of the few remaining independent airlines in the United States that is not owned by one of the four larger carriers. Even larger airlines have been acquired: Northwest was bought by Delta, Continental merged with United and U.S. Airways joined with American Airlines. The recent consolidations in the industry have been successful, leading to significant cost cuts. Alaska Air, with its profits and customer service reputation, is the last real prize left.
There has been speculation that Delta might buy Alaska Air for its West Coast routes. The rumors have pushed Alaska Air shares higher.
Alaska Air is particularly strong in the busiest West Coast markets, especially in Salt Lake City, Los Angeles and Seattle. It has also begun to challenge carriers in East Coast markets, including several cities in Florida. Revenue and net income have risen steadily over the past five years. And Alaska Air often ranks highest in customer satisfaction among traditional carriers.”
FlyerTalk member lg20 is skeptical at best: “I think that only one of the brands on the 2013 list is actually gone. So, the track record isn’t great. #1 on the 2013 list was American Airlines, who seem to still be around. At least that was the brand they chose to keep.”
Meanwhile, Alaska Airlines is forging ahead with such innovations as being the first carrier to incorporate new overhead bins from The Boeing Company, which will purportedly increase storage space in its aircraft by up to 48 percent.
As of the time this article was posted here at The Gate, no FlyerTalk member agreed with the prediction — and you can count me as one of them…
…so I will ask you: do you believe that the Alaska Airlines brand will disappear by 2015?
i think it will stick around and we will see a greater relationship between AS and AA as DAL gets more aggressive in that area. my friends who fly out of SEA and PDX seem pretty loyal to AS and don’t like DL so much… with that said, as a DL flier i can’t say i wouldn’t like a better WC network
Go google “ten brands that will disappear in 2013”, and you’ll the same type of article from two years ago, predicted that by now American Airliens would dsiappear (FALSE), MtetroPCS would disappear (FALSE), Research In Motion (yes, it got renamed to Blackberry, but the aricle didn’t claim it would get renamed, it claimed it would be totally gone by now!), And try the same for 2012, and you’ll see they claimed Sears would be gone by now, but I just shopped there the other week.
So no, based on track record alone of these Wall St “ten brands to disappear” articles, at least some of the ones in the years list are going to wrong, and Alaska seems like a likely candidate. (Even if Delta TRIES to acquire it, it’s far from certain it would happen.)
These Wall Street analysts couldn’t hit the side of a barn. I don’t know why anyone listens to them?
American Airlines is disappearing. Its US Airways under the name of American.
These type of simplistic articles benefit two groups – those who teach Junior Achievement classes and those who are very sophisticated stock investors. The Junior Achievement teachers can demonstrate the idiocy of today’s business media and really good stock investors (I am not one of them, unfortunately) can make some money.
1. Alaska Airlines will not disappear anytime soon from poor financial results. They are very profitable, financially secure, and fly routes that the government will subsidize if things go bad.
2. Alaska Airlines will not be purchased by Delta, nor will it merge with Delta. The article does not mention sophisticated, grown-up, concepts like getting government approval for large acquisitions and mergers. Probably because the article writer is not capable of grasping those concepts. The government will not give such approval without Alaska and Delta agreeing to give up slots at Seattle, and nether airline wants that. Delta can just grow at Seattle without the hassle of an acquisition, particularly having to agree to keep flying the Alaska “snow and ice” routes in perpetuity.
3. American is not going to try another merger right now. Too much, too soon after US Airways and neither AA or US Airways really like the west coast. The west coast is all about Asia and the One World partners Cathay and Japan are very strong.
4. The speculation about any merger or acquisition will drive Alaska’s stock price up (which has in fact happened the last few days). A few speculators will make a few bucks if they get in and out in time.
5. When no acquisition of merger occurs, and the consequences of a Seattle fare war hurting profits become apparent, the stock price will decline a lot and it will occur quickly. Some short sellers will do well.
6. If Alaska decides its best approach to Delta trying to make Seattle a hub is to become a more nationwide airline, it may try to expand internally or try to buy or merge with a primarily east coast airline like Jet Blue. The article does not consider that possibility. It just says Alaska will go away, which is nonsense. But expansions and mergers are expensive for the expander/acquirer, so that may put further pressure on Alaska’s stock price. Unfortunately, any possible acquisition of Jet Blue is far too speculative to even consider from an investment perspective.
So a Junior Achievement class could learn that:
Don’t believe everything you read in the financial media, even the Wall Street Journal, because some of these writers are just not that savvy.
Speculation and sensationalism can drive up a stock price in the short-term, but be very careful about investing that way.
The government is very powerful and must be considered when doing financial and economic analysis (and don’t rely on the media to consider this).
The basic economic principles of increased competition and encroachment on territory are very real and have the potential to decrease profits and stock prices.
Maybe it was a Seattle-based writer who was tired of seeing the airplane in this picture. 😛
Alaska is a special airline that wants to and deserves to remain independent. I would like to see stronger ties with American, but more than anything I want to see them continue to operate on their own.
I think Alaska is a wonderful airline, but that doesn’t preclude a merger or acquisition if the offer is right. That Alaska is doing well now has little to do with its future performance; just ask so many companies that once were doing very well with extremely established brands which didn’t see the future coming that would knock them out of the game.
I think Alaska is likely to forge a partnership or consider merging/being acquired in the future. It cannot compete with Delta in the long run, and it doesn’t have the balance sheet to grow large enough to compete across the country against UA, AA, and DL.
Those who claim that American’s perpetuation proves the 2013 forecast as wrong are missing the point–the 2013 forecast got it right that American had to change or would die. It changed by merging with US Airways. That the new company is keeping the American brand name doesn’t preclude the forecast from having gotten it largely right that American was in trouble.
Semantics aside, the new American will be a different beast from the old. Just as the new United is a different beast (many would say worse) than the old pre-Continental merger.
Alaska may have a shot at a partnership with American to make it able to better feed into AA’s new route map, since AA’s biggest weakness is the West Coast. Alaska may also consider partnering or merging with JetBlue, since the two together will be able to compete far better against AA, UA, and DL. It even is possible that Southwest, with its issues now, may see Alaska or JetBlue as a possible partner to better compete against the legacy three.
Either way, I think the current stand alone Alaska has its days numbered–which began the moment DL began to create a Seattle hub to compete against UA and AA for trans-Pacific business.
Whether Alaska deserves to be independent is irrelevant–that’s not how the business world works! Continental deserved to be independent, as it was a growing and very profitable airline before it merged with UA…but its future growth was less certain because its route network gave it very little chance to become more than what it was. The same is true for Alaska.
I agree with bhrubin’s post excellent points and well written ! Delta is going to have it’s hub in Seattle, no matter what, now in the long run how big or small it is depends on the market, more importantly its international market. The bigger that grows the more they will pound away at “feeding” those flights.
American does have a large hole in it’s system and that is the west coast, so do they shore it up with a partnership with AS? I personally would like to see that as I am not in anyway a fan of DL. period.I think they have shown a lack of decorum in they way they are handling this whole affair.
The next 12 months or so will be very interesting to see how all of this shakes out. I have “looked” around since I am already qualified for next year and sadly for me and my current flight patterns it’s either UA (UGH) or go to AA. Both have offered me PLT. But for the time being I will continue to march on with AS!
Re: “expert” predictions, see Philip Tetlock. 😉
I think a DL/AS merger would have a serious uphill battle with the Department of Justice given the dominate position this would create in Seattle and the near monopoly it would impose on Alaska. That being said, DOJ display tremendous weakness in backing down on the AA/US merger so perhaps that will embolden DL to make a play for AS.