Alaska Airlines CFO says IT system OK, even after repeated failures

SEATTLE — After two crippling IT outages this year, Alaska Airlines now says it is confident travelers won’t have to worry about tech problems interrupting their plans in the future.

While Alaska has some room to improve its tech systems, it does not have a “systemic” IT failure, Chief Financial Officer Shane Tackett said, citing a third-party review Alaska commissioned to study its IT infrastructure.

Alaska hired the consulting firm Accenture to look for ways to strengthen its system after an IT outage grounded its fleet for eight hours in October. That outage followed another hardware failure that grounded Alaska’s fleet for three hours in July.

The disruptions come amid a big year for Alaska, as it integrates Hawaiian Airlines after acquiring the company in 2024. This time last year, Alaska unveiled its long-term plan to capitalize on its acquisition and its newly inherited fleet of widebody planes, unveiling new Pacific routes and a goal to turn its Seattle hub into a global gateway.

Alaska said in a recent statement it is already seeing “meaningful progress” from its effort to integrate the two airlines. Company executives have said the IT outages are not related to its merger with Hawaiian.

Alaska did not share details on the scope of Accenture’s assessment, or what actions the company would take once the review was complete. Alaska has not released the initial results of that review but said in a statement it had “begun to implement recommendations.”

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Speaking at a Goldman Sachs conference Thursday, Tackett said Accenture found there are some actions Alaska can take, what he called “hygiene.” The airline can improve resiliency and redundancy, and increase daily checks of its systems. But the review did not find a large, systemic failure.

“We were open-minded to ‘Are we missing something on the architecture side of it? Have we just underresourced ourselves?’” Tackett said. “That’s not what they found. A lot of the things that we’re hearing that we should be doing are pretty quick-win types of things.

“We fully expect to be stable and resilient. … People can have confidence that we’re not going to have infrastructure, data center-related interruptions in our operations at all, Tackett continued.

It was one of the first times Alaska executives have spoken publicly about the company’s finances and operations since the IT outage in October.

Alaska’s system went down on the same day it reported its third-quarter financial results, and the company canceled a scheduled earnings call the following day.

In that time period, Alaska also had to navigate a 43-day government shutdown and a resulting order from the Federal Aviation Administration for major carriers to reduce flights.

In a financial filing Wednesday, Alaska Air Group, which owns Horizon Air and Hawaiian Airlines as well as its namesake carrier, said it would take a financial hit from the turbulent start to its fourth quarter, three months that include the recent IT outage, the government shutdown and a fire at a California refinery that is a major source of jet fuel for West Coast carriers. The airline lowered its expected earnings from 40 cents to 10 cents.

The government shutdown and resulting flight cancellations cost the airline about $30 million, Alaska said in its Wednesday statement. The October IT outage, as well as a Microsoft Azure cloud outage that impacted Alaska’s systems that same month, cost the airline $50 million.

But the airline is getting back on track, Tackett told analysts at the Goldman Sachs conference.

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West Coast jet fuel prices are back in line with other markets, Tackett said. Bookings and revenue have not fully returned to preshutdown levels, but they are still “better than 95% of the days we’ve observed this year,” he said.

“I don’t think the impacts are likely to linger into next year,” Tackett added.

Analysts from JP Morgan agreed that the events of the last few months wouldn’t impact the airline’s performance next year, except for the constant threat of volatile fuel prices. But in a note to investors summing up their reaction to Alaska’s recent financial disclosures, the analysts wrote, “a miss is a miss.”

A bumpy few months

A few weeks into the government shutdown, the FAA ordered major carriers to reduce operations at 40 airports across the country, an effort to ease the strain on air traffic controllers who had spent weeks working without pay and were starting to miss shifts in high volumes.

Alaska Air Group canceled about 600 flights during that period, impacting 40,000 travelers, the airline said in the Wednesday financial filing. Revenue has “not fully recovered to pre-shutdown trends,” the filing read.

Tackett clarified Thursday at the conference that the airline was more bullish than its filing may have led analysts to believe.

Before the mandated flight reductions, Alaska had been recovering from a drop-off in domestic bookings earlier this year, Tackett said. Bookings had “started to creep their way back up” to match the level of demand Alaska saw at the end of 2024 and into 2025.

“Then, like everybody else, bookings hollowed out,” he said.

Once the government reopened and the FAA reversed course on its directive, bookings bounced back quickly.

Delta Air Lines — the second-largest carrier at Seattle-Tacoma International Airport, after Alaska — said Wednesday it lost $200 million from the government shutdown, contributing to a quarterly loss of 25 cents in earnings per share.

Savanthi Syth, an airline analyst with financial services company Raymond James, estimated immediately after Alaska’s IT outage that it would trim about 15 cents from Alaska’s earnings per share, or about $26 million from its pretax income for the fourth quarter.

Alaska’s estimate Wednesday calculated a higher impact, estimating a loss of 25 cents in earnings per share. The government shutdown and higher fuel prices each trimmed 15 cents in earnings per share, Alaska said.

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The IT failures were not related to Alaska’s recent acquisition of Hawaiian Airlines and resulting changes to integrate the two airlines’ systems, Tackett emphasized.

But he did acknowledge that Alaska’s IT teams are “spread, maybe, a tiny bit thin,” as they work on integrating the platforms and other changes Alaska has introduced this year, including a joint loyalty program and a new premium credit card.

On the refinery front, Tackett said the airline is paying less for fuel today than it was before the fire, even though the refinery is not yet back online.

Still, he acknowledged the industry needed a long-term solution to make fuel prices “less volatile” on the West Coast. That could mean bringing more oil on ships from Asia directly to Seattle or Portland, which, in turn, would require local political buy-in.

“It’s not a novel idea,” Tackett said. “We just have to execute it up in Seattle.”

The fate of Hawaiian’s A321s

At the Goldman Sachs conference, Tackett also shed light on Alaska’s thinking about its aircraft fleet, which now includes a mix of planes from Boeing and its European competitor Airbus.

The last time Alaska had a mixed fleet — when it acquired Virgin America in 2016 — it shed the inherited Airbus planes because it was cheaper and more efficient to operate aircraft from just one manufacturer.

Tackett said the airline has that same thinking today about its narrowbody fleet, which includes Boeing’s 737 MAX and Hawaiian’s fleet of 17 in-service Airbus A321s. But Alaska hasn’t yet decided what it will do.

“There really isn’t a reason in our mind to have two pieces of equipment that do the same thing; if you can get one, it has much better economics,” Tackett said. “The number of A321s we have is too few — you need double that number or zero.”

On the widebody front, Alaska plans to keep operating both manufacturers “as far as we can see into the future,” Tackett said.

Alaska doesn’t have the same cost concerns as it would with its narrowbodies because it will operate the widebody A330s out of Hawaiian’s Honolulu headquarters, where the airline already has the right equipment for service and maintenance, and pilots and flight crews are already trained on operating that model.

Alaska is “extending leases and buying out of leases” for the A330, Tackett continued, and has the option to buy five more Boeing 787 widebody planes.

With Hawaiian’s Airbus fleet now in its fold, Alaska also has to deal with any Airbus challenges. On Thursday, Tackett acknowledged that the airline may “have to go down a couple lines of flying” due to an issue with the Pratt and Whitney engine on the A321.

Hawaiian’s operations were not affected by a recent software issue on Airbus’ A320 family, the airline said last week.