Horizon Air Accelerating Fleet Transition, Implementing Schedule Changes

With fuel prices remaining at record high levels, Horizon Air is moving up the phase out of its smaller turboprops to speed its transition to a single fleet of highly fuel efficient Bombardier Q400s. In the process, the airline is implementing additional schedule changes to further improve its financial performance. All 12 of Horizon’s remaining 37-seat Q200s will be out of its operating fleet by Oct. 28, instead of the original target date of April 2009. Horizon will also begin the phase out of its 70-seat CRJ-700 jets in September. During this transition, it will take delivery of 14 additional 76-seat Q400s. The Q400 is the most fuel efficient and environmentally friendly aircraft of its size in the world, burning 30 percent less fuel and producing 30 percent less CO2 than a comparable jet. Horizon currently has 34 Q400s in its fleet and holds options for 20 more (in addition to the 14 already on the way). Horizon now expects its transition to an all-Q400 fleet to be completed by the end of 2009, unless market conditions warrant another adjustment. The schedule changes shown below will appear in reservation systems July 5, except for the changes to Pendleton service, which are pending government approval. Routes with Q400 service added and new routes (effective dates as noted) Medford-Portland: The current five daily flights (two Q400s and three Q200s) will be reduced to four (two Q400s and two Q200s) from Aug. 25 through Sept. 6 and then become two Q400s and two CRJ-700s starting Sept. 7, increasing seats by 11 percent compared to today. Yakima-Seattle: The current four daily flights (one Q200 and three Q400s) will be served entirely with Q400s starting Sept. 7, increasing seats by 15 percent. Eugene-Portland: The current three daily flights (all Q200s) will become two Q200s and one Q400 starting July 7, one Q200 and two Q400s starting Sept. 7, and three Q400s starting Oct 26, more than doubling the number of seats compared to today. Redmond/Bend-Portland: The current five daily flights (four Q200s and one Q400) will be reduced to four (three Q200s and one Q400) on Aug. 25, as previously announced. Starting Oct. 12, all four flights will be served with Q400s, increasing seats by 36 percent compared to today. Wenatchee-Seattle: The current four daily flights (all Q200s) will be served by three Q400s and one Q200 Aug. 25, as previously announced. Starting Oct. 26, all four flights will be served with Q400s, more than doubling the number of seats compared to today. Walla Walla-Seattle: The current three daily flights (all Q200s) will be served by three Q400s starting Oct. 28. Two of the three westbound departures will originate in Pendleton, stop in Walla Walla, and then proceed nonstop to Seattle. Eastbound, two of the flights will operate nonstop to Walla Walla, while a third will make an intermediate stop in Pendleton. Pendleton-Seattle (new route): The current three daily flights to Portland (all Q200s, two of which make an intermediate stop in Pasco) will become two daily Q400 flights to Seattle starting Oct. 28. Both westbound flights and one of the two eastbound flights will make an intermediate stop in Walla Walla. The new service will provide East Oregonians with new national and international connecting flight opportunities through Seattle. Connections to Horizon’s Seattle-Portland Shuttle will be no more than one hour away. This change is pending government approval. Pendleton-Walla Walla (new route): Two daily Q400 flights will operate between the two cities starting Oct. 28, each originating and terminating in Seattle. Routes where flights are being reduced or eliminated (effective dates as noted) Portland-Sacramento: Five daily CRJ-700 flights will be reduced to four starting Sept. 7. Portland-Burbank: Four daily CRJ-700 flights will be reduced to three starting Sept. 7. Portland-Ontario: Four daily CRJ-700 flights will be reduced to three starting Sept. 7. Portland-San Jose: Three daily CRJ-700 flights will be reduced to two starting Oct. 26. Alaska Airlines will continue to offer an additional three daily flights. Pendleton-Portland: The current three daily Q200 flights to Portland will be replaced with two daily Q400 flights to Seattle starting Oct. 28 (see above). This change is pending government approval. Pendleton-Pasco: The current two daily Q200 flights to Pasco are being replaced with two daily Q400 flights to Walla Walla starting Oct. 28 (see above). This change is pending government approval. Pasco-Portland: Flights from Pasco are currently combined with Pendleton on one routing to Portland. As a result of the rerouting of Pendleton flights to Seattle starting Oct. 28, direct service between Pasco and Portland will be discontinued. Horizon will continue to serve Pasco with six Q400 flights to Seattle, providing a one-hour (or shorter) connection to Horizon’s Seattle-Portland Shuttle. Portland-Seattle: The 26 Horizon Shuttle flights each way (taking effect Aug. 25 and five flights less than today) will be trimmed by two additional flights starting Oct. 26, and the remaining 24 Shuttle flights each way will be operated with Q400s or CRJ-700s. Shuttle flights will operate hourly and also on the half-hour during busier commute periods of the day. Horizon seeks to rebid Pendleton Essential Air Service contract Horizon currently serves Pendleton under a contract with the U.S. Department of Transportation Essential Air Service program, which provides a subsidy for two of the three 37-seat Q200 flights the airline operates to Portland. As reported above, Horizon’s Q200s will be phased out of its fleet by Oct. 28 and replaced with Q400s. Since the Q400 (which seats more than twice as many passengers as the Q200) has higher operating costs, and fuel costs continue to rise, Horizon has initiated a process with the DOT to be given the opportunity to rebid the current Pendleton EAS contract. Horizon’s bid proposes providing two daily Q400 flights from Pendleton to Seattle (instead of the current three Q200 flights to Portland) beginning Oct. 28, thus still meeting the current EAS requirements of two daily Pendleton flights to either city. Horizon ending service to Klamath Falls and North Bend/Coos Bay on Oct. 11 As part of its fleet transition and plan to improve financial performance in light of record high fuel costs, Horizon will end all flights from Portland to Klamath Falls and North Bend/Coos Bay, Ore., on Oct. 11. Klamath Falls is currently served with three daily Q200s to Portland, while North Bend/Coos Bay has four Q200 flights now and three in the fall. "Despite our best efforts to adjust flight schedules and fares in order to make these routes financially viable, consistent profitability has proved to be elusive,” said Dan Russo, Horizon’s vice president of marketing and communications. "The astronomically high fuel prices have only made the situation worse, and so we find ourselves with no choice but to reduce our losses by taking this action.” "It’s a sad day when we have to announce that we are going to leave any city, and it’s particularly heart-wrenching in the case of these two Oregon cities, which we have served since 1982, shortly after Horizon was established,” said Jeff Pinneo, Horizon’s president and CEO. "Our people there have established a long tradition of excellent customer service and contributed much to their communities. I wish to thank them for their years of service as well as extend our gratitude to the customers who have flown with us over the past 26 years. Hopefully, some years down the road, once the economic picture greatly improves and these markets experience more growth, we can consider returning.” Horizon currently has 10 employees in Klamath Falls and 12 in North Bend/Coos Bay, and they are all being given the opportunity to apply for openings elsewhere in Horizon’s route system. After Horizon ends its service to Klamath Falls, the nearest Horizon airport will be Medford (78 miles away), with nonstop service to Los Angeles, Portland and Seattle. The nearest Horizon airport to North Bend/Coos Bay will be Eugene (104 miles away), with nonstop service to Portland and Seattle, and direct (one-stop) service to Los Angeles. Horizon’s fleet serves 49 cities throughout Arizona, California, Oregon, Washington, Idaho, Montana, Nevada, Baja California Sur (Mexico), and British Columbia and Alberta (Canada). Together, Horizon Air and Alaska Airlines serve 92 cities and are subsidiaries of Alaska Air Group, Inc. (NYSE:ALK).