From the time that Linious “Mac” McGee, nearly 75 years ago, founded the carrier that would eventually become Alaska Airlines, the company has not been a typical airline. In fact, it wasn’t even an airline per se at first. McGee and his partners used their three-seat Stinsons as a way to support their thriving fur trading business. Passengers were charged 20 cents a mile; 35 percent of all freight moved in the territory was by plane. 
Aviation helped open commerce in the great white north, but it was often at great cost. Several pilots were killed, including McGee’s partner Steve Mills in 1936.
Others were lost in storms and never heard from again. Engines froze in flight, valves burned out and were sucked into engines, landing gear snapped, and fierce storms sometimes blew planes away. It was a particularly unforgiving environment.
The company continued to adjust and adapt over the next three-quarters of a century, however, to become not only the main carrier in Alaska, but also one of the major carriers in the continental U.S.
In early 2006, several familiar faces at Alaska Airlines assumed new positions as the company announced its intentions to move to an all-737 fleet, stepped up its hiring projections, and began to look toward new routes. In April, the company also announced plans for a $3.5 million upgrade of its Nome Airport terminal in Alaska, with an expected completion date of March 2007.
Like the other majors, Alaska is crawling back toward profitability following the post-9/11 slowdown, despite the constant challenge of rising fuel costs and worldwide geopolitical uncertainties.
In April, Alaska Air Group, Inc. reported a first quarter net loss of $79.1 million, or $2.36 per share, compared to a net loss of $80.5 million, or $2.39 per diluted share, in the first quarter of 2005. The 2006 results include an impairment charge on the company’s MD-80 fleet of $131.1 million ($81.9 million, after tax, or $2.44 per share) resulting from the decision to transition to an all-Boeing 737 aircraft fleet.
Alaska Airlines passenger traffic in the first quarter of 2006 increased 4.7 percent on a capacity increase of 3.1 percent. Load factor increased 1.1 percentage points to 73.7 percent, compared to the same period in 2005. Alaska’s operating revenue per available seat mile (ASM) increased 9.3 percent and its operating costs per ASM, excluding fuel, impairment of aircraft, and restructuring charges and adjustments, decreased 6.8 percent. The airline’s pretax loss for the quarter was $124.7 million, compared to income before taxes and the accounting change of $15.4 million in 2005. Excluding the items noted above, Alaska would have reported pretax income of $7.6 million for the quarter, compared to a pretax loss of $54.9 million in the first quarter of 2005.
Alaska Airlines is one of the oldest airlines in the industry, founded in 1932 when Mac McGee began flying his three-seat Stinson between Anchorage and Bristol Bay. During the Great Depression, McGee stowed away on an Alaska-bound steamship seeking opportunity. The Indiana native worked as a miner, truck driver, dishwasher and fur buyer before starting the airline. Despite many hardships getting the company (literally) off the ground due to the unforgiving climate and terrain of the state, Alaska eventually prospered and continued to evolve over the years, enduring numerous transitions.
In 1934, a merger with Star Air Service created the largest airline in Alaska. There were several mergers and name changes before it settled on the obvious, “Alaska Airlines.” By the late 1940s, using surplus military aircraft, Alaska branched into worldwide charter work, including the Berlin Airlift in 1948 and Operation Magic Carpet, the airlift of thousands of Yemenite Jews to Israel in 1949.
Alaska strengthened its operating base in the 1960s by merging with Alaska Coastal-Ellis and Cordova, Alaska carriers owned by aviation pioneers Shell Simmons, Bob Ellis, and Mudhole Smith. The area served by Alaska then stretched from Fairbanks south to Ketchikan and down to Seattle. During the Cold War, Alaska Airlines made headlines often with regular charters to the Soviet Union.
When Fairbanks businessmen Ron Cosgrove and Bruce Kennedy became involved with the company in 1972, the airline was in dire financial straits. The pair won back the trust of creditors and improved performance. About that time, the Alaska oil pipeline also gave the company a much-needed shot in the arm.
Following deregulation in 1979, many airlines folded, but for Alaska Airlines, it was a new beginning. The airline expanded throughout the West Coast and in 1987 joined forces with two carriers similarly committed to outstanding customer service: Horizon Air and Jet America. By the end of the 80s, Alaska had tripled in size. Its fleet had increased five-fold, and the route map included scheduled service to Mexico and Russia. Today, the company continues to serve 58 destinations throughout Alaska, Canada, the lower 48, and Mexico.
Alaska’s corporate headquarters is in Seattle. Alaska’s sister airline under the Alaska Air Group umbrella is Horizon Airlines. Together, the two companies serve 88 cities.
NEW FLIGHT OPS/CHIEF PILOT
The beginning of 2006 brought several personnel changes in key positions at Alaska, including a new vice president of flight operations, a new chief pilot, and a new vice president of finance and treasurer.
In February, Benjamin Forrest, a 27-year veteran of the airline industry and former fighter pilot, took over the flight operations from his previous position as director of corporate safety. “What’s interesting about this position is how many areas of the airline it touches besides pilots. I get to deal with a lot of other people besides flight operations to make this thing work. I handle the pilots, the training, dispatch, and we used to handle fuel planning, too,” says Forrest of his new duties. “We are one of the few airlines lucky enough to have hedged positions in fuel, which is helping us greatly right now.”
A 1979 graduate of Santa Clara University, Forrest gained most of his early flight experience as an active pilot in the military from 1972 though 1978, where he flew the F-14. He then became a reservist and flight entrepreneur from 1978 through 1998 before coming to Alaska Air.
The new chief pilot at Alaska, Robert Spero, has been with the airline since 1987 when he was hired as a 727 second officer. Spero replaces former chief pilot Paul Majer, who has returned to flying as an MD-80 captain. Spero and Forrest are the primary personnel in terms of pilot recruitment and screening.
Also new at the helm of finance at Alaska is Jay Schaefer, 37. As vice president of finance and treasurer, Schaefer is responsible for several areas that affect pilot recruitment and retention, including the company’s investment, risk management, supply chain, fuel hedging, fleet, and cash management programs.
ALL BOEING FLEET
In March of this year, Alaska announced its plans to begin retiring the 140-seat Boeing MD-80s in its fleet in favor of the more fuel-efficient Boeing 737 line. At present the company has 12 of the Boeing 737-900s, six 737-800s, 22 737-700s, 40 of the 737-400s, and seven of the 737-200C craft. Counting the MD-80s that are still in service, the company has a total fleet of 113 airplanes. The goal is to replace all the MD-80s over the next year or two.
“We are growing at about 6 percent this year ASM-wise, and the same thing in 2007 and 2008. We are accelerating the retirement of the MD-80s and the 737-200s also. We will be replacing the 200s with 737-400 freighters and combis,” Forrest says. “So we’ll carry a lot more freight and a few more people and be a lot more capable that way. And then the 737-800s that we are buying to replace the MD-80s are a lot more efficient, carry more people, and block-hour wise will be more efficient. Utilization should be up around 11.4 hours versus about 9.7 for the MD-80s.”
The company projects an annual savings of $46.9 million (based on $1.96 per gallon) by changing to an all-737 fleet.
HIRING PROJECTIONS
According to Forrest, the company has about 1,400 pilots on staff currently and will be hiring at least 220 over the next two years. “Through the end of 2008, we have planned retirements of 173 and we’ll be hiring about 220, so we’ll have a net increase of about 50 pilots,” he says.
“After that, we’ll be growing at about 8 percent per year, so we’ll be bringing on at least 120 pilots per year—and that doesn’t include additional retirements after ’08—so there will be a lot of hiring going on in the immediate future.”
Currently, there is no official flow-though agreement with Horizon, although several new hires per year do come from the regional carrier. The rest of the new hires are coming from a mix of bankrupt carriers, military, flight schools, and other regionals. “We do hire a lot of Horizon folks and they are great employees, because they know the system and how we operate. And our procedures are pretty well aligned, so when we get them, they work out pretty well,” says Forrest.
“We really don’t see a lot of difference between turbo-prop and turbo-jet experience as long as the guy has got command time and has a strong, incident-free record, and a good reputation,” Forrest adds. He says the current base locations are factors in pilot selections, but that the company hopes to expand those. “We do give priority to folks who might have connections to the Pacific Northwest simply because our biggest pilot base is in Seattle, but we are spreading our wings there. We are looking at a pool in the Los Angeles area, too. The better you can make a guy’s life so he doesn’t have to commute, the better off we all are. We also recruit heavily from (the state of) Alaska, too, to staff the Anchorage base. We have a diverse group up there—about one-third Alaska bush pilots, one-third military, and one-third commuter pilots.”
The airline’s pilots are represented by ALPA, and new contract negotiations will also begin soon, in advance of a May 2007 renewal. Upgrade time is currently between five and six years, Forrest says. Standard benefit packages include major medical, dental, life insurance, and 401(k). The monthly guarantee for line pilots is 75 hours, and 77 for reserve, but Forrest says it’s hard to say what these will be after the new contract is negotiated.
Forrest says that in the past the company has accepted résumés by fax or mail, but they are strongly encouraging applicants to use the online application at www.alaskaair.com. (Follow the links under “Careers.”)
If you’ve interviewed with Alaska in the past, take note: the process is being tweaked. “Our hiring process is evolving right now,” Forrest points out. “We used to have an initial interview, and then a very challenging simulator profile that everybody had to go through, then a more in-depth interview, and then we would turn in recommendations to the chief pilot for the final determination. But right now, we are giving (the two) interviews and a simulator only if it’s a relatively low-time candidate, or if they are right at the minimum (hour) limit of our requirements, like if a guy is right at 750 (hours) PIC, for instance. But we are not giving the sim to everybody.”
New on the interview format: psychological testing. “We are just starting that program, and we’ll be implementing that in the future but the chief pilot (Rob Spero) is handling that,” Forrest says. (For more information on interviewing at Alaska, see sidebar “On The Record” with Chief Pilot Rob Spero.)
Forrest believes the tangible benefits of working for Alaska are obvious, but there are other intangibles, such as getting to fly regularly in the majestic Northwest. “I think we have the best (most scenic) route system of any airline in the world,” he adds. “And I’ve flown to a lot of places. This is some awesome flying: everything from flying southeast Alaska with RNP (Required Navigational Performance) approaches through the canyons, on a dark and stormy night, banking 90 degrees to the final approach with a mountain on one side—it’s just remarkable. It’s great working up in the Arctic in the wintertime, getting to see Mt. McKinley in the summer early in the morning coming into Fairbanks. And then in January and February, we’re laying over in Cancun, so it’s some pretty great stuff.”
Forrest adds that several new destinations will likely be announced over the next few months. In his opinion, the close, family environment at Alaska is one of the favorite aspects of working there. “The people we have, and the spirit of (community) giving here that exists within the organization is great. That, together with the flying, makes it a pretty great place to work.”
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