Tuesday, August 24, 2010

Horizon Air will end branded flying

Alaska Air Group has made the decision to eliminate subsidiary Horizon Air's independent, or branded flying, in favor of moving to a 100% capacity purchase agreement with its major affiliate Alaska Airlines. The information was contained in an internal employee communication from new Horizon Air President Glenn Johnson to the airline's employees. Johnson raised the possibility of the action in AAG's second-quarter conference call with analysts, at which time he also raised questions about the future of the Horizon Air brand.

According to the memo, Horizon will switch to an all-CPA business model beginning Jan. 1, 2011, thereby "gaining a stable and predictable revenue source insulated from marketplace risks."

Johnson told employees, "It's been clear for a while that Horizon's business model no longer worked, as is evident from the financial results." Horizon Air had a pre-tax loss of $1.2 million in the second quarter ended June 30 and $7.4 million for the six months. Currently, around 45% of Horizon's capacity is operated under a CPA with AK with the remainder flown under its own brand.

Johnson also said "the possibility of changing Horizon's external brand…is being considered, but no decision has been made."

Additionally, Horizon will outsource Q400 heavy maintenance to Empire Aerospace. The carrier had been trying to reach a cost-saving agreement with its mechanics, represented by the International Brotherhood of Teamsters, to keep the work in-house, Johnson said during the quarterly conference call.

(Perry Flint - ATWOnline News)

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