Alaska ‘turning the corner’

SEATTLE — After a bruising year marred by layoffs, delayed flights, complaints about lost bags, and a spate of cabin pressurization scares, the head of Alaska Air Group Inc. exudes confidence the company has “turned the corner.”

Bill Ayer, chairman and chief executive of Alaska Airlines and its parent company, said the airline’s on-time arrivals and departures have risen steadily since January, in some cases surpassing the company’s goals.

Contract baggage handlers who replaced unionized ramp service workers are doing a better job after their employer, Menzies Aviation, spent three months taking a close look at operations at Seattle-Tacoma International Airport.

Overall, Ayer said ramp service is improving after workers got a slight wage boost and the airline added an extra baggage carousel in Seattle.

“I think where we are today is definitely having turned the corner,” Ayer said.

Alaska Air Group has benefited handsomely from hedging contracts that have sheltered it from soaring fuel costs. Ayer said last year’s hedges saved the company about $125 million. This year, the company is 46 percent hedged at just under $41 a barrel; crude, by comparison, is hovering above $70 a barrel.

Ayer said a lower percentage of the company’s fuel contracts will be hedged in the next two years. Beyond that, the company hasn’t decided on a strategy to protect its bottom line from soaring fuel costs.

Alaska Airlines, the nation’s ninth-largest carrier, has spent the past few years aggressively cutting costs. Two years ago, the company cut about 200 management jobs then closed its heavy maintenance facility in Oakland, Calif., laying off about 750 employees.

Last May, it laid off nearly 500 baggage handlers, outsourcing those jobs. Then pilots took a pay cut.

Ayer, 51, describes those and other cost-cutting measures as difficult moves that were necessary to ensure the company’s long-term viability.

“We weren’t going to shy away from those tough decisions, because the viability of the business is the most important thing,” said Ayer, who joined Alaska Airlines in 1995 after 13 years at sister carrier Horizon Air.

The layoffs dealt a blow to morale at a company that has long been known for customer service. Ayer said he doesn’t blame workers for feeling frustrated or disappointed, but thinks the company’s struggles have not irreparably harmed its reputation.