onewithwings
Well-known member
- Joined
- Jun 3, 2006
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Starting Jan. 1, Horizon Air will change to an all-CPA (capacity purchase agreement) business model, gaining a stable and predictable revenue source insulated from marketplace risks. Our simpler operating model will focus on providing safe, reliable, cost-effective capacity to Alaska Airlines at a market-based price.
"I've been sharing with everyone these past weeks that it's been clear for a while that Horizon's business model no longer worked, as is evident from the financial results," President Glenn Johnson says. "We needed to find a way to move financial performance into the 'win' column alongside all of our other successes, such as safety, reliability and customer satisfaction. I'm now convinced shifting to an all-CPA model will do that and help us achieve our 10 percent ROIC [return on invested capital] target. And it will let us focus on what we are best at – operating a safe and reliable airline while providing top-notch customer service in the air and on the ground."
Horizon will remain an airline separate from Alaska and operate under a separate operating certificate, so Alaska will still be obligated by regulations to clearly disclose to customers that Horizon is the operating carrier for flights designated with the AS code. But from an internal financial viewpoint, the flying will be accounted for differently, aligning with how other regional airlines are compensated by their major airline partners. Alaska will determine where, when, and how much Horizon will fly, and buy all the needed capacity under the CPA. Horizon will no longer be financially at risk for filling seats to raise revenue; our focus will be on providing our service as cost effectively as possible.
"This is the road to growth for Horizon, where we all ultimately want to be," Johnson says. "Once we have brought our cost structure in line with market and are clearly on a path toward our ROIC goal, we'll be better positioned to make the case for obtaining more aircraft in order to do more CPA flying for Alaska and potentially other airlines."
"I've been sharing with everyone these past weeks that it's been clear for a while that Horizon's business model no longer worked, as is evident from the financial results," President Glenn Johnson says. "We needed to find a way to move financial performance into the 'win' column alongside all of our other successes, such as safety, reliability and customer satisfaction. I'm now convinced shifting to an all-CPA model will do that and help us achieve our 10 percent ROIC [return on invested capital] target. And it will let us focus on what we are best at – operating a safe and reliable airline while providing top-notch customer service in the air and on the ground."
Horizon will remain an airline separate from Alaska and operate under a separate operating certificate, so Alaska will still be obligated by regulations to clearly disclose to customers that Horizon is the operating carrier for flights designated with the AS code. But from an internal financial viewpoint, the flying will be accounted for differently, aligning with how other regional airlines are compensated by their major airline partners. Alaska will determine where, when, and how much Horizon will fly, and buy all the needed capacity under the CPA. Horizon will no longer be financially at risk for filling seats to raise revenue; our focus will be on providing our service as cost effectively as possible.
"This is the road to growth for Horizon, where we all ultimately want to be," Johnson says. "Once we have brought our cost structure in line with market and are clearly on a path toward our ROIC goal, we'll be better positioned to make the case for obtaining more aircraft in order to do more CPA flying for Alaska and potentially other airlines."
