When running an airline, the only constant is change. Each day more than 1,400 flights take off across Alaska Air Group. Behind every one of them is a complex network of systems, processes, aircraft and the work of our 30,000 dedicated employees. When everything goes as planned, our guests never notice what it takes to get you to your destination.
When something unexpected happens – like a government shutdown or an IT outage – our job is to respond, care for our guests and return to normal operations as soon as possible.
In the last couple months, we’ve seen our fair share of curveballs, and we just provided updated guidance to investors that outlines the corresponding financial impact. Here’s an overview of the impacts from the last quarter and how we’re preparing for the future:
Government shutdown
In October, the federal government shutdown led the FAA to mandate flight reductions, which resulted in roughly 600 cancellations across Alaska, Hawaiian and our regional operation, impacting approximately 40,000 guests. The disruption and lost revenue are expected to equate to a $30 million loss for the quarter.
The strategic plans we implemented to reduce the impact and the resilience of our operating teams allowed our operation to recover quickly once the shutdown ended.
IT outages
Following our late October IT outage that affected flight operations, we engaged a third-party consultant to conduct a comprehensive audit of our IT infrastructure and processes. We have begun to implement recommendations and will continue to invest in resiliency in our data centers. The IT outage and a third-party cloud services outage around the same time led to roughly 400 flight cancellations and are expected to cost Alaska a combined $50 million this quarter due to lost revenue and operational recovery costs.
Returning to resilience and reliability
Despite a year with more turbulence than we planned for, we have made meaningful progress on the integration between Alaska and Hawaiian. In the midst of these challenges, our employees just ran the best operation over Thanksgiving in the industry, with the most on-time performance of any carrier, and we’re well positioned to head into next year focused on executing our Alaska Accelerate strategic plan: launching new service to Europe, unlocking the full power of Atmos Rewards, and bringing our premium experience to even more guests.