Category Archives: Alaska Air Group

Alaska Air Group reports fourth quarter 2020 and full-year results

Alaska Air Group has released its 4Q and 2020 financial results:

Financial Results:

  • Reported net loss for the fourth quarter and full year 2020 under Generally Accepted Accounting Principles (GAAP) of $430 million, or $3.47 per diluted share, and $1.3 billion, or $10.59 per diluted share. These results compare to fourth quarter 2019 net income of $181 million, or $1.46 per diluted share, and full year 2019 net income of $769 million, or $6.19 per diluted share.
  • Reported adjusted net loss for the fourth quarter and full year 2020, excluding payroll support program wage offsets, special items, and mark-to-market fuel hedging adjustments, of $316 million, or $2.55 per diluted share, and $1.3 billion, or $10.17 per diluted share. These results compare to fourth quarter 2019 adjusted net income of $181 million, or $1.46 per diluted share, and full year 2019 adjusted net income of $798 million, or $6.42 per diluted share.
  • Reported adjusted net debt of $1.7 billion, flat from December 2019 despite a 59% decline in operating revenues for the year.
  • Reported a debt-to-capitalization ratio, including certain short-term borrowings, of 61%.
  • Held $3.3 billion in unrestricted cash and marketable securities as of Dec. 31, 2020.

Liquidity and Fleet Updates:

  • Accessed approximately $5 billion in new liquidity in 2020, including $1.2 billion raised in the capital markets and approximately $600 million in bank financing.
  • Reached an agreement with the U.S. Treasury in January 2021 to receive an extension of payroll support totaling $533 million, $266 million of which was received on Jan. 15, 2021.
  • Extended the period available to draw funds under the CARES Act loan program from March 26, 2021 to May 28, 2021.
  • Announced plans to expand the mainline fleet and restructure the existing aircraft purchase agreement with Boeing. In total, Air Group will take delivery of 68 737-9 MAX aircraft between 2021 and 2024, inclusive of 32 previous purchase commitments and 13 aircraft to be leased from Air Lease Corporation. https://twitter.com/AlaskaAir/status/1341466170688466945?s=20
  • Took delivery of Alaska’s first 737-9 MAX aircraft on January 24, 2021, which is expected to enter revenue service on March 1, 2021.
  • Permanently removed an additional 20 Airbus A320 aircraft from the fleet in the fourth quarter, resulting in 40 Airbus aircraft removed in 2020. A total of 31 Airbus aircraft remain in the operating fleet as of the end of the year.
  • Held $3.4 billion in cash and marketable securities as of Jan. 22, 2021, and total liquidity of $5.2 billion.

Operational and Guest Safety Updates

  • Announced seven new routes in the fourth quarter, including three “fun and sun” destinations connecting Anchorage to Las Vegas, Denver and San Francisco, and expanded service from Southern California to Austin and New York.
  • Eliminated change fees and extended the flexible travel policy for tickets purchased through March 31, 2021.
  • Implemented Next-Level Care initiative, which includes more than 100 measures designed to create a safe experience for guests and employees.
  • Named the safest U.S. airline by AirlineRatings.com in their annual Top 20 Safest Airline report.
  • Launched the West Coast International Alliance with American Airlines on Jan. 1, 2021, which will unlock new benefits for Alaska Mileage Plan members in the spring.
  • Partnered with healthcare providers to offer rapid and standardized COVID-19 testing for those guests traveling to destinations that require a negative result.
  • Received diamond level certification from the Airline Passenger Experience Association for the health and safety standards Alaska and Horizon Air implemented to keep guests safe throughout their journey.
  • Launched pre-clearance program for guests traveling to the Hawaiian Islands from the West Coast with an approved negative COVID-19 test.
  • Announced a partnership with Microsoft to use sustainable aviation fuel to offset the environmental impact of certain business air travel.
  • Announced oneworld benefits for elite Mileage Plan members, providing tier status in the global alliance to Alaska’s elite members, as the company works toward joining oneworld on March 31, 2021.

Alaska Air Group Inc. today reported a fourth quarter 2020 GAAP net loss of $430 million, or $3.47 per diluted share, compared to net income of $181 million, or $1.46 per diluted share in 2019. Excluding the impact of payroll support program wage offsets, special items and mark-to-market fuel hedge adjustments, the company reported a fourth quarter adjusted net loss of $316 million, or $2.55 per diluted share, compared to adjusted net income of $181 million, or $1.46 per diluted share in the fourth quarter of 2019.

The company reported a full-year 2020 GAAP net loss of $1.3 billion, compared to net income of $769 million in the prior year. Excluding the impact of payroll support program wage offsets, special items and mark-to-market fuel hedge adjustments, the company reported an adjusted net loss of $1.3 billion, or $10.17 per diluted share for 2020, compared to adjusted net income of $798 million, or $6.42 per diluted share in 2019.

“We are not out of the woods, but we are seeing signs of brighter days ahead,” said Air Group CEO Brad Tilden. “The people of Alaska and Horizon have really shown their grit over the past year, and the rest of the leadership team and I could not be more proud of them. We’re positioned to come out of this crisis with our balance sheet unimpaired and our competitive advantages intact, and both of these set us up for a strong future and a long runway for growth.”

 

Alaska’s Brad Tilden to retire, Ben Minicucci will take over

Alaska Air Group’s board of directors announced today that Brad Tilden will retire as chief executive officer on March 31, 2021, and Ben Minicucci, president of Alaska Airlines and a member of the Alaska Air Group board, will succeed him. Tilden will continue to serve as Alaska’s board chair.

Alaska Airlines today announced Brad Tilden (right) will retire as chief executive officer on March 31, 2021, and Ben Minicucci (left), president of Alaska Airlines and a member of the Alaska Air Group board, will succeed him. Tilden will continue to serve as Alaska’s board chair.

“We are through the initial phases of our coronavirus response, and Alaska is on a solid trajectory,” said Tilden. “Now is the time to position Alaska for future growth, and now is the time to move forward with this long-planned transition. Ben has proven himself over a long career as a person who cares passionately about our people and our culture, as a leader who builds strong teams and produces results, and as a person who will work tirelessly to push this great company forward. He has earned this role, and I look forward to supporting him as board chair.”

“This announcement is the culmination of a multi-year succession planning process,” said Patricia Bedient, Alaska Air Group lead independent director. “The board has complete confidence in Ben’s ability to lead Alaska to great success in the years to come. We are also grateful to Brad for his outstanding leadership during his eight years as CEO. With Ben as CEO and Brad continuing as chair, Alaska’s future is bright.”

“I am honored and humbled by this incredible opportunity, and profoundly grateful for Brad’s leadership and partnership,” said Minicucci. “Our company is built on the strength of its people and our values, and I am so proud of who we are and all we have accomplished. The way in which our employees have navigated through challenges is truly inspiring – and the last nine months is no exception. I’m excited and optimistic about our future as we continue this journey together.”

During Minicucci’s 16-year career with Alaska, he has contributed in various roles of increasing responsibility. In 2016, he became president of Alaska Airlines and he was also named CEO of Virgin America upon Alaska’s acquisition of the airline. From 2009-2016, he served as executive vice president and chief operating officer where he directed the implementation of a customer service guiding framework which empowers employees to deliver personal and kind-hearted experiences to guests. He also held the role of vice president of Seattle operations (2007-2009) where he dramatically increased Alaska’s on-time performance and reliability. Minicucci joined Alaska in 2004 as staff vice president of maintenance. He holds a master’s degree in mechanical engineering from the Royal Military College of Canada and served in the Canadian Armed Forces for 14 years. He has two children and lives in Issaquah, Washington.

Alaska Air Group is the holding company for Alaska Airlines, the fifth largest U.S. passenger airline, and regional carrier Horizon Air.

 

Alaska Airlines CEO Brad Tilden announces he will step down as CEO on March 31, 2021, and remain as board chair of Alaska Air Group, the parent company of Alaska Airlines and Horizon Air. The two airlines have 21,000 employees and fly to destinations throughout the United States, Canada, Mexico and Costa Rica.

Aviation veteran Ben Minicucci will succeed Brad Tilden as Alaska Air Group CEO next year. Minicucci has worked for Alaska Airlines for 16 years and is the current president of the 5th largest U.S. airline.

Alaska Air Group reports a third quarter net loss of $431 million

Alaska Air Group has made this announcement:

Financial Results:

  • Reported net loss for the third quarter of 2020 under Generally Accepted Accounting Principles (GAAP) of $431 million, or $3.49 per diluted share, compared to net income of $322 million, or $2.60 per diluted share in the third quarter of 2019.
  • Reported net loss for the third quarter of 2020, excluding payroll support program wage offsets, special items and mark-to-market fuel hedge accounting adjustments, of $399 million, or $3.23 per diluted share, compared to adjusted net income of $326 million or $2.63 per diluted share, in the third quarter of 2019.
  • Maintained adjusted net debt of $1.7 billion, flat from Dec. 31, 2019.
  • Reported a debt-to-capitalization ratio, including short-term borrowings related to COVID-19, of 59%.
  • Held $3.8 billion in unrestricted cash and marketable securities as of Sept. 30, 2020.

Liquidity Updates:

  • Reduced cash burn to approximately $4 million per day in the third quarter from approximately $5 million per day in the second quarter.
  • Obtained nearly $1.2 billion in financing through the issuance of Enhanced Equipment Trust Certificates, secured by 42 Boeing and 19 Embraer aircraft.
  • Reached an agreement with the U.S. Treasury in September to participate in the CARES Act loan program, and drew $135 million in September. The U.S. Treasury advised in October 2020 that the facility will be upsized to $1.9 billion.
  • Held $3.7 billion in cash and marketable securities as of Oct. 21, 2020 and total liquidity of $5.5 billion.

Operational and Guest Safety Updates:

  • Extending blocking of middle seats on mainline aircraft through Jan. 6, 2021.
  • Announced today a partnership with Microsoft to use sustainable aviation fuel to offset the environmental impact of certain business air travel.
  • Permanently eliminated change fees and extended the flexible travel policy for all new ticket purchases through Dec. 31, 2020.
  • Launched a partnership with certain healthcare providers to offer rapid and standardized COVID-19 testing for those guests traveling to destinations which require a negative test result.
  • Expanded the company’s Next-Level Care initiative, including implementation of new technology to create a touch-free experience for guests and a partnership with essential oils brand EO to provide hand sanitizing wipes onboard.
  • Strengthened face covering policy, requiring all guests over the age of two to wear a cloth mask or face covering at all times onboard.
  • Initiated voluntary early-out and incentive leave programs to our frontline employee workgroups, which were accepted by more than 4,000 employees. As a result, furloughs were limited to approximately 400 employees.
  • Announced 15 new routes during the third quarter, aimed at connecting West Coast travelers to key leisure destinations, including Jackson Hole, Wyoming, and Fort Myers, Florida.
  • Received official oneworld invitation on July 23, 2020. The company has announced it will officially join the alliance on March 31, 2021.

Alaska Air Group Inc. today reported third quarter 2020 GAAP net loss of $431 million, or $3.49 per diluted share, compared to net income of $322 million, or $2.60 per diluted share in the third quarter of 2019. Excluding the impact of payroll support program wage offsets, special items and mark-to-market fuel hedge adjustments, the company reported adjusted net loss of $399 million, or $3.23 per diluted share, compared to adjusted net income of $326 million, or $2.63 per diluted share in 2019.

“We are gaining momentum as we climb our way out of this crisis,” said Air Group CEO Brad Tilden. “Each of the last six months has been better than the month before in terms of flights offered and passengers carried, and to date, we’ve kept our net debt unchanged. Alaska has competitive advantages that continue to serve us well in this crisis, and we are fighting this battle with the most passionate and dedicated employees in the business.”

The following table reconciles the company’s reported GAAP net income and earnings per diluted share (diluted EPS) for the three and nine months ended Sept. 30, 2020 and 2019 to adjusted amounts.

Alaska Airlines aircraft photo gallery (Airbus):

Alaska Air Group reports a second quarter GAAP loss of $214 million

Alaska Air Group has made this announcement:

Financial Results:

  • Reported net loss for the second quarter of 2020 under Generally Accepted Accounting Principles (GAAP) of $214 million, or $1.73 per diluted share, compared to net income of $262 million, or $2.11 per diluted share in the second quarter of 2019.
  • Reported net loss for the second quarter of 2020, excluding the payroll support program wage offsets, special items and mark-to-market fuel hedge accounting adjustments, of $439 million, or $3.54 per diluted share, compared to net income of $270 million or $2.17 per diluted share, in the second quarter of 2019.
  • Reported a debt-to-capitalization ratio, including short-term borrowings related to COVID-19, of 51%.

Liquidity Updates:

  • Lowered cash burn from an exit rate of $400 million per month in March to $120 million in June, a 70% reduction.
  • Closed on an additional $164 million in secured financing in the second quarter, secured by seven aircraft.
  • Held $2.8 billion in unrestricted cash and marketable securities as of June 30, 2020.
  • Obtained nearly $1.2 billion in financing through the issuance of Enhanced Equipment Trust Certificates (EETC), secured by 42 Boeing and 19 Embraer aircraft, on July 2, 2020.
  • Held $3.8 billion in cash and marketable securities as of July 22, 2020, including EETC funds received in July.
  • Received $992 million in support for Alaska and Horizon under the Coronavirus Aid, Relief, and Economic Security (CARES) Act Payroll Support Program (PSP) in April 2020.
  • Reached an agreement for McGee to receive $30 million in CARES Act PSP support, $15 million of which was received in June 2020.
  • Signed a non-binding letter of intent with the U.S. Treasury to obtain up to $1.1 billion in additional CARES Act loans.

Operational Updates:

  • Received official oneworld invitation on July 23, 2020. The company is working to accelerate the timeline and join the partnership by the end of 2020.
  • Returned 43 mainline aircraft and all Horizon Air and SkyWest Airlines aircraft to service. As of July 22, 2020, 89 mainline aircraft remain temporarily parked.
  • In July 2020, eliminated 300 management positions, initiated early-out programs for frontline workers and offered incentive leaves to pilots as we work to mitigate involuntary furloughs.
  • Received FAA certification to transport cargo in the passenger cabin on five Boeing 737-900 passenger aircraft, and began cargo-only service to Unalakleet, Alaska.
  • Announced expansion to year-round service to King Salmon and Dillingham, Alaska, to be flown by Horizon E175 aircraft, as well as began weekly service on Boeing 737 aircraft to Cold Bay, Alaska.
  • Announced 12 new routes to be flown to various destinations from Los Angeles International Airport.

Next-Level Care:

  • Expanded the Company’s Next-Level Care initiative, including nearly 100 measures, offering layers of safety through every single stage of travel and helping guests build confidence in flying. Such measures include the following:

Covering and caring for guests

    • Flyers are required to complete a pre-travel wellness agreement at check-in. Guests aged 12 and older are required to wear a mask throughout all stages of travel.
    • Empowered flight attendants with the ability to issue “yellow card” warnings to guests refusing mask policies, with the consequence of suspension of future travel for non-compliance.
    • Provided hand sanitization stations throughout the airport, including lobby and gate areas. Personal sanitizing wipes made available onboard starting July 2020.
    • Extended “Peace-of-Mind” waiver, allowing changes to ticketed travel without change or cancellation fees for tickets booked through Sept. 8, 2020.

Personal Safety

    • Limiting the number of guests onboard and extended blocking middle seats on mainline aircraft through Sept. 30, 2020.
    • Reduced onboard service to limit interaction between flight crews and guests.
    • Placed floor decals throughout our airports, reminding guests to “mind their wingspan,” when at ticket counters, kiosks and boarding.
    • Limited capacity of airport lounges to 50% and extended lounge memberships active as of April 1 by six months.
    • Boarding aircraft from the rear, and in smaller groups, to limit interaction between guests.
    • Working with airports to install plexiglass barriers at all guest touchpoints along their journey.

Exceeding CDC guidelines and clearing the air

    • Aircraft are equipped with hospital-grade HEPA air filters, which are designed to remove 99.95% of airborne contaminants and bring outside air on board every three minutes.
    • Exceed CDC cleaning guidelines on board and use high-grade, EPA-certified disinfectant to clean critical areas, and perform a deep-clean and sanitization of all aircraft overnight.
    • Utilizing electrostatic disinfectant sprayers, which emit a safe, high-grade EPA cleaning solution to sanitize surfaces.

Alaska Air Group Inc. today reported second quarter 2020 GAAP net loss of $214 million, or $1.73 per diluted share, compared to net income of $262 million, or $2.11 per diluted share in the second quarter of 2019. Excluding the impact of payroll support program wage offsets, special items and mark-to-market fuel hedge adjustments, the company reported adjusted net loss of $439 million, or $3.54 per diluted share, compared to adjusted net income of $270 million, or $2.17 per diluted share in 2019.

“Airlines are currently navigating the biggest demand contraction in the history of aviation,” said Air Group CEO Brad Tilden. “The rest of the leadership team and I could not be more proud of how the people of Alaska and Horizon reacted quickly and decisively to adjust our operations and our business, and to help our guests feel safe when they fly with us. Being tested in moments like this reveals character, and I’m confident in our future because of the way our people are responding every day with grit, determination and perseverance. Those are the qualities that will carry our airline and our country through this crisis and beyond.”

Alaska Airlines aircraft photo gallery:

Alaska Airlines aircraft slide show:

https://airlinersgallery.smugmug.com/frame/slideshow?key=T7vbHq&speed=3&transition=fade&autoStart=1&captions=0&navigation=0&playButton=0&randomize=0&transitionSpeed=2

Alaska Air Group reports first quarter 2020 results; COVID-19 response

Alaska Air Group issued this report:

Financial Results:

  • Reported net loss for the first quarter of 2020 under Generally Accepted Accounting Principles (GAAP) of $232 million, or $1.87 per diluted share, compared to net income of $4 million, or $0.03 per diluted share in the first quarter of 2019.
  • Reported net loss for the first quarter of 2020, excluding impairment charges, merger-related costs and mark-to-market fuel hedge accounting adjustments, of $102 million, or $0.82 per diluted share, compared to net income of $21 million or $0.17 per diluted share, in the first quarter of 2019.
  • Reported impairment and other related charges of $160 million before tax related to certain aircraft, aircraft parts, and intangible assets.

COVID-19 Impacts and Response:
The impacts of COVID-19 on our business have been unprecedented. Demand deterioration began in February, and in March cancellations overwhelmed new bookings. Today demand remains over 90% below normal levels. Alaska Air Group’s priorities as it continues to manage through this crisis are to ensure the health and safety of guests and employees, to preserve financial strength, and to plan for the future of the company. The following are key actions taken to date:

Guests and Employees

  • Implemented enhanced cleaning procedures on aircraft, including the use of high-grade, EPA-registered disinfectants and electrostatic sanitizing spray. Additionally, all planes are equipped with hospital-grade HEPA filters.
  • Taken additional steps to ensure guest health and safety including limiting load factors and seat availability, and reducing most in-flight services and requiring flight attendants and customer service agents to utilize masks.
  • Requiring face masks for guests starting May 11 and for employees who cannot maintain six feet of social distance from guests or coworkers starting May 4. This includes pilots, flight attendants and customer service agents.
  • Extended elite Mileage Plan status to all members until Dec. 31, 2021, and offered for all 2020 qualifying miles to apply to 2021 status achievement.
  • Provided guests with a “Peace of Mind” waiver, allowing changes to ticketed travel without change or cancellation fees.
  • Utilized our dedicated fleet of cargo freighter to transport essential supplies from Seattle and throughout Alaska.
  • Donated 1 million meals to address food insecurity across our network, and 1 million LIFT miles to transport medical staff free of charge to respond to COVID-19. The airlines continue to support transportation of essential supplies through air cargo services.

Fleet and Network

  • Flown capacity in April decreased more than 80% compared to the prior year, and capacity cuts in May will also be at least 80%. We continue to expect capacity cuts in June to be significant.
  • Parked 156 mainline aircraft and 13 Horizon Air aircraft, and suspended flying for 8 SkyWest Airlines aircraft.

Cash Preservation and Expense Reduction

  • Held $2.1 billion in unrestricted cash and marketable securities as of March 31, 2020.
  • As of May 4, 2020, held $2.9 billion in cash and marketable securities, including Coronavirus Aid, Relief and Economic Security (CARES) Act Payroll Support Program (PSP) funds received in April.
  • Drew $400 million from existing credit facilities, and executed an agreement for a $425 million 364-day term loan facility.
  • Obtained an additional $50 million in secured financing on April 22, 2020.
  • Enacted a company-wide hiring freeze for all non-essential positions, reduced salaries of senior management and offered  voluntary short-term and incentive leave programs accepted by more than 5,000 employees.
  • Reduced cash burn from $400 million per month in March to $260 million in April, with the goal of reaching $200 million in June.
  • Suspended over $500 million in capital spending, largely through the deferral of pre-delivery aircraft payments and non-aircraft capital projects.
  • Negotiated payment extensions or reductions with lessors, vendors and airports.
  • Suspended stock repurchases and future dividend payments.

CARES Act Assistance

  • Reached an agreement with the U.S. Treasury to receive support under the CARES Act PSP and received $992 million in funding on April 23, 2020.
  • Applied to participate in the Loan Program of the CARES Act, which would give Air Group the option to access up to $1.1 billion in federal loans through Sept. 30, 2020.

Alaska Air Group Inc. today reported first quarter 2020 GAAP net loss of $232 million, or $1.87 per diluted share, compared to net income of $4 million, or $0.03 per diluted share in the first quarter of 2019. Excluding the impact of impairment charges,  merger-related costs and mark-to-market fuel hedge adjustments, the company reported adjusted net loss of $102 million, or $0.82 per diluted share, compared to adjusted net income of $21 million, or $0.17 per diluted share in 2019.

“In the face of one of the greatest challenges in the history of commercial aviation, our people at Alaska and Horizon are doing extraordinary work to respond to this crisis,” said Alaska Airlines CEO Brad Tilden. “I want to thank each of them for everything they’re doing to serve our guests and to preserve the integrity of our operation. I also want to thank our leadership team for acting swiftly and courageously to reduce our cash burn rate and give us the best chance possible to navigate through this storm and capitalize on opportunities we may see on the other side. Alaska has been here for more than 88 years, serving our customers and communities, and providing good jobs for our people. Our commitment is to ensure this continues, and to emerge from this crisis better and stronger.”

Alaska Airlines aircraft photo gallery:

Alaska Airlines pilots respond to fourth quarter and full year 2019 earnings

ALPA issued this statement:

The Alaska Airlines Master Executive Council (MEC) of the Air Line Pilots Association, Int’l (ALPA), issued the following statement in response to Alaska Air Group’s fourth quarter and 2019 full year earnings report, which stated an adjusted pretax profit of $1.054 billion, making this the airline’s eleventh consecutive year of profits.

“On behalf of all pilots of Alaska Airlines, we congratulate all fellow employees for their professionalism and hard work that earned us a 7.05 percent performance bonus payment for 2019. The pilots’ dedication and commitment to this airline was on display all year, despite a surge in contract compliance issues and operational challenges.

“The Alaska Airlines pilots have been in contract talks with management for more than nine months, as we seek long-overdue improvements to quality of life, work rules, job security, career satisfaction, and retirement and insurance. We have seen our peers at other airlines enjoy prominent gains in these areas, while the demand for commercial airline pilots only continues to grow. With profit margins above industry average, it’s time for Alaska Airlines management to recognize that to attract and retain well qualified, professional pilots, this airline must offer a market-rate contract to pilots..

“We look forward to a timely and successful outcome that recognizes our contributions to this company’s success and are hopeful and optimistic that management will work to resolve the outstanding contract issues with us.”

Alaska Air Group reports fourth quarter 2019 and full-year results

Alaska Air Group reported its 4Q and full-year 2019 financial results:

Financial Highlights:

  • Reported net income for the fourth quarter and full year 2019 under Generally Accepted Accounting Principles (GAAP) of $181 million, or $1.46 per diluted share, and $769 million, or $6.19 per diluted share. These results compare to fourth quarter 2018 net income of $23 million, or $0.19 per diluted share, and full year 2018 net income of $437 million, or $3.52 per diluted share.
  • Reported adjusted net income, excluding merger-related costs and mark-to-market fuel hedging adjustments for the fourth quarter and full year 2019 of $181 million, or $1.46 per diluted share, and $798 million, or $6.42 per diluted share. These results compare to fourth quarter 2018 adjusted net income of $93 million, or $0.75 per diluted share, and full year 2018 adjusted net income of $554 million, or $4.46 per diluted share. This quarter’s adjusted results compare to the First Call analyst consensus estimate of $1.41 per share.
  • Paid a $0.35 per share quarterly cash dividend in the fourth quarter, bringing total dividends paid in 2019 to $173 million.
  • Repurchased a total of 1,192,820 shares of common stock for approximately $75 million in 2019.
  • Generated approximately $1.7 billion of operating cash flow, and used approximately $696 million for capital expenditures, resulting in approximately $1 billion of free cash flow in 2019, representing free cash flow conversion of 133%.
  • Grew passenger revenues by 8% compared to the fourth quarter of 2018, and by 6% compared to full-year 2018.
  • Generated full-year adjusted pretax margin of 12% in 2019, 3.1 points higher than the 8.9% in 2018.
  • Held $1.5 billion in unrestricted cash and marketable securities as of Dec. 31, 2019.
  • Achieved the goal of 75% repayment on the $2 billion debt borrowed to fund the acquisition of Virgin America, driving our debt-to-capitalization ratio to 41% as of Dec. 31, 2019, from 47% as of Dec. 31, 2018 and 51% as of Dec. 31, 2016.
  • Reduced net adjusted debt to EBITDAR to 0.9x as of Dec. 31, 2019 from 1.7x as of Dec. 31, 2018.

2019 Accomplishments and Highlights:

Recognition and Awards

  • Ranked “Highest in Customer Satisfaction Among Traditional Carriers” in 2019 by J.D. Power for the 12th year in a row.
  • Named “Best U.S. Airline” by Condé Nast Traveler in their 2019 Readers Choice Awards for the second consecutive year, a continuation of the ten consecutive years that Virgin America received the recognition.
  • Mileage Plan™ ranked first in U.S. News & World Report’s list of Best Travel Rewards Programs for the fifth time.
  • Ranked as top U.S. airline in Newsweek’s 2020 Best Customer Service awards.
  • Named “Best Mid-Size Airline” by TripAdvisor in their 2019 Travelers Choice awards.
  • Earned top spot for customer satisfaction on the American Customer Satisfaction Index Travel Report for 2018-2019.
  • Named “Best Airline” by Kayak in their 2019 Travel Hacker Awards.
  • Ranked the best U.S. airline in Money Magazine for the second year in a row.
  • Rated as one of only two U.S. airlines in the Top 20 safest airlines in the world for 2019 by AirlineRatings.com.
  • Ranked as the top U.S. airline in the Dow Jones Sustainability Index (DJSI) for the third consecutive year.

Our People

  • Ranked among Forbes’ 2019 global list for “World’s Best Employers” for the fifth year in a row.
  • Completed Flight Path, our leader-led program aimed at informing and engaging our employees, bringing over 95% of Air Group employees together to discuss our culture and future.
  • Awarded $163 million in incentive pay for 2019, an 11% increase over 2018.
  • Alaska technicians, represented by the Aircraft Mechanics Fraternal Association, ratified an integrated seniority list and a transition agreement, including a two-year contract extension, in July 2019. This completes a major integration milestone, in that all of our workgroups are under joint agreements, less than three years from our acquisition of Virgin America.
  • Alaska’s clerical, office, and passenger service, and Alaska’s ramp and stores employees, both represented by the International Association of Machinists, each ratified new five-year agreements in August 2019.

Our Guests and Product

  • Launched commercial service from Paine Field in Everett, Washington, to 10 West Coast destinations.
  • Finished painting the Alaska Airlines livery on all Airbus aircraft.
  • Completed cabin interior renovations on the 42nd Airbus aircraft, or approximately 60% of the Airbus fleet.
  • Installed high-speed satellite Wi-Fi on the 104th mainline aircraft, or approximately 45% of the mainline fleet.
  • Opened a new 15,000+ square foot flagship lounge in the North Satellite at Sea-Tac International Airport and announced plans to build a new lounge in Terminal 2 at San Francisco International Airport.
  • Added EL AL Israel Airlines as a new global Mileage Plan partner.
  • Added four Boeing 737-900ER aircraft and two Airbus A321neo aircraft in 2019.
  • Added four Embraer 175 (E175) aircraft to the Regional operating fleet in 2019.

Our Communities

  • Launched LIFT, Alaska’s newly renamed social and environmental impact program, complete with a week of employee volunteer events in eight cities across our network.
  • Donated over $15 million and contributed more than 41,000 volunteer hours to support nonprofits in our local communities, focusing on youth and education, medical (research/transportation) and community outreach.

Alaska Air Group Inc. today reported fourth quarter 2019 GAAP net income of $181 million, or $1.46 per diluted share, compared to $23 million, or $0.19 per diluted share in 2018. Excluding the impact of merger-related costs and mark-to-market fuel hedge adjustments, the company reported fourth quarter adjusted net income of $181 million, or $1.46 per diluted share, compared to adjusted net income of $93 million, or $0.75 per diluted share in the fourth quarter of 2018.

The company reported full-year 2019 GAAP net income of $769 million, compared to $437 million in the prior year. Excluding the impact of merger-related costs and mark-to-market fuel hedge adjustments, the company reported adjusted net income of $798 million, or $6.42 per diluted share for 2019, compared to adjusted net income of $554 million, or $4.46 per diluted share in 2018.

“When we announced our intention to purchase Virgin America in the spring of 2016, we launched a body of work that was designed to make Alaska the ‘Go To’ airline for people living up and down the West Coast,” said Brad Tilden, Alaska’s CEO. “2019 was a fantastic year as we completed the majority of that work and began to see significant returns from our investment. We’re grateful to our people for pulling together to produce this strong financial performance, and proud that they are sharing in this financial success through our incentive pay program.”

Alaska Airlines introduces a new uniform designed to top safety standards

Alaska Airlines is rolling out its new Luly Yang custom-designed uniform collection certified to STANDARD 100 by OEKO-TEX®, the highest industry standard for safety, making Alaska and Horizon Air the first U.S. airlines to achieve this certification.

“This is a major milestone that was years in the making. Before the designs, before the first stitch, before the first button sewn, we took steps to ensure that employee uniforms were safe and of the best quality,” said Sangita Woerner, Alaska Airlines’ senior vice president of marketing and guest experience. “It was important to take our time and to collaborate with our union partners to create a uniform that was safe, stylish, high quality and functional for all aspects of our business.”

STANDARD 100 by OEKO-TEX® ensures that garments meet or exceed global safety standards with regards to harmful substances. The finished garment and each of its components are certified, down to the material, thread and dyes.

Since the collection first debuted in 2018, the design has been refined and adjusted with input from more than 175 employees who put the uniform through the paces with on-the-job wear tests. The new uniforms are being rolled out to employees through early 2020, with Horizon Air and Alaska Lounge concierges already donning the new uniforms.

Alaska started the process almost four years ago by surveying thousands of uniformed employees and followed up with focus groups and work-site visits to understand the features different workgroups wanted to see in their new uniforms. Overwhelmingly, the top requests from employees were more pockets and designs that look great on all body shapes and sizes, and were suited for a wide range of climates.

Additionally, more than 1,200 safety tests were conducted on the uniforms for over 165 unique color combinations. In total, Alaska’s custom uniforms incorporate more than 100,000 zippers, 1 million buttons, 500,000 yards of fabric and use well over 30 million yards of thread.

Using this employee research, Yang spent two years designing and creating a signature silhouette for the Alaska collection. Her focus on fit and function enabled additional touches including water-resistant materials, active wear fabrics, longer shirt tails that don’t untuck from skirts and trousers, and flexible textiles that move with the body.

“The STANDARD 100 by OEKO-TEX® certification is a first for our uniforms,” Jeff Peterson, Alaska Airlines Master Executive Council president of the Association of Flight Attendants. “The association is very pleased that our partnership with management has resulted in a high standard of safety that will help flight attendants feel confident in wearing their uniform.”

In order to achieve this standard, Alaska worked in partnership with Unisync Group Limited of Toronto, one of the largest uniform suppliers in North America. Together, Alaska, Yang and Unisync produced custom fabrics, buttons and signature accessories for the new program, ensuring the garments provide optimal on-the-job performance and earned the STANDARD 100 by OEKO-TEX® certification.

“Alaska Airlines created a strong partnership with us from the beginning – that’s the biggest reason for their success in earning the STANDARD 100 by OEKO-TEX® label,” said Ben Mead, OEKO-TEX® representative. “Achieving certification is incredibly challenging, and their commitment to leading with safety has been unwavering.”

STANDARD 100 by OEKO-TEX® was developed in 1992 by an international consortium of textile research and testing institutes. OEKO-TEX® now includes 18 institutes in Europe and Japan with offices in more than 60 countries. STANDARD 100 by OEKO-TEX® testing is known for ensuring that textiles are tested for potentially harmful substances and allergens. This standard is used by many retailers including Pottery Barn, Calvin Klein, Target, Macy’s and children’s-wear company Hanna Andersson.

From the Alaska Airlines blog:

Photos by Ingrid Barrentine

A day in the life of an airline uniform is hard. They brush through bustling airport crowds. They stretch to close overhead bins. They stand up to scorching heat and arctic cold as baggage is loaded, bolts are turned and fuel is measured.

And then they’re washed, dried, and expected to do it again. And again. And again.

So, when we set out to update our uniforms in partnership with Seattle designer Luly Yang in 2016, it wasn’t just a matter of picking a handful of colors and materials.

It was the start of a four-year journey in creating the perfect balance of quality, and form and function to achieve a U.S. airline industry first: a custom-designed uniform collection certified to STANDARD 100 certification by OEKO-TEX®, the highest industry standard for safety.

To meet the rigorous standard, more than 1,200 safety tests on fabrics, zippers, buttons, thread, linings and more were conducted.

Step 1: Asking the right questions

How do you get to the bottom of what more than 20,000 employees need from their uniforms? Well, you ask them. Over the past two years, we conducted surveys, focus groups and work-site visits to get the feedback they needed.

The answers? More pockets to accommodate all the odds and ends that come with keeping an airline in motion. Designs that look great on people of all shapes and sizes. And materials with the perfect amount of elasticity and breathability to keep a crew feeling comfortable and looking polished from the time they take off from Honolulu and land in Anchorage.

Step 2: Creating the look

With the research finished, it was Luly Yang’s time to shine. The designer got to work creating a signature silhouette for the Alaska collection, reviewing designs with employees, gathering feedback and making refinements to meet the needs of Alaska’s pilots, flight attendants, maintenance & engineering teams and more.

“This was the ultimate puzzle for a designer,” Yang said, in an interview with CNBC. “In this case it was more than 20,000 clients, employees with hundreds of body shapes, 13 work groups and sometimes 45 sizes per garment. It was complicated, which is why I loved it.”

The collection, featuring more than 90 garments and accessories, debuted at an employee fashion show in January 2018, hosted in the airline’s Sea-Tac hangar.

But the work was far from finished.

Step 3: From runway to jetway

They looked good, they felt good, but the only way to know if the new uniforms were up to the job was to see how they held up to the pressure of packing, unpacking, bending, lifting, scuffs, spills and spin cycles.

Alaska selected 175 employees to participate in 60 day “wear tests” of the new uniform and report back on performance. Following the first wear test, refinements were made and then a second, abbreviated wear test took place to validate the improvements and quality standards.

Step 5: Ready for lift off

After four years of research, design, feedback and testing, Alaska’s new uniforms launched, making Alaska and Horizon Air the first U.S. airlines to earn the Standard 100 by Oeko-Tex rating for its custom garments.

As the new uniforms continue their rollout in early 2020, with Horizon Air and Alaska Lounge concierges already donning the new look, they have also stood up to scrutiny from one of the toughest panels on the planet: anonymous social media users.

Horizon Air flight attendant Parisjat Banomyong posted a video of her before/after uniform transformation on TikTok, earning more than 140,000 likes.

“My daughter and I just did it for fun and then it blew up,” said Banomyong. “I heard so much ‘you look amazing’ and ‘I can’t wait to see these uniforms on my flight.’ It was really fun to see the reaction.”

Alaska Air Group reports third quarter 2019 results

Alaska Airlines has issued this financial report:

Financial Highlights:

  • Reported net income for the third quarter of 2019 under Generally Accepted Accounting Principles (GAAP) of $322 million, or $2.60 per diluted share, compared to net income of $217 million, or $1.75 per diluted share in the third quarter of 2018.
  • Reported net income for the third quarter of 2019, excluding merger-related costs and mark-to-market fuel hedge accounting adjustments, of $326 million, or $2.63 per diluted share, compared to $237 million or $1.91 per diluted share, in the third quarter of 2018. This quarter’s adjusted results compare to the First Call analyst consensus estimate of $2.52 per share.
  • Paid a $0.35 per-share cash dividend in the third quarter, a 9% increase over the dividend paid in the third quarter of 2018.
  • Repurchased a total of 874,019 shares of common stock for approximately $53 million in the first nine months of 2019.
  • Generated $1.4 billion of operating cash flow in the first nine months of 2019.
  • Made a voluntary contribution of $65 million to defined benefit pension plans in the third quarter.
  • Held $1.6 billion in unrestricted cash and marketable securities as of Sept. 30, 2019.
  • Reduced debt-to-capitalization ratio to 42% as of Sept. 30, 2019 compared to 47% as of Dec. 31, 2018.

Operational Highlights:

  • Alaska’s clerical, office, passenger service, ramp and stores employees, represented by the International Association of Machinists, ratified a new five-year agreement in August.
  • Opened a new 15,000+ square foot flagship lounge in the North Satellite at Sea-Tac International Airport in July.
  • Reallocated flying to expand offerings between the Pacific Northwest and California, increasing network utility and providing more non-stop service on the West Coast.
  • Completed cabin interior renovations of the 25th Airbus aircraft during the third quarter.
  • Installed high-speed satellite Wi-Fi on the 54th mainline aircraft.

Recognition and Awards:

  • Named “Best U.S. Airline” by Condé Nast Traveler for the second consecutive year.
  • Ranked as top U.S. airline in Newsweek’s 2020 Best Customer Service awards.
  • Mileage Plan ranked first in the U.S. News & World Report’s list of Best Airline Rewards Programs for the fifth consecutive year.
  • Ranked as the top U.S. airline in the Dow Jones Sustainability Index for the third consecutive year.
  • Ranked among Forbes’ 2019 global list for “World’s Best Employers.”

Alaska Air Group Inc. reported third quarter 2019 GAAP net income of $322 million, or $2.60 per diluted share, compared to $217 million, or $1.75 per diluted share in the third quarter of 2018. Excluding the impact of merger-related costs and mark-to-market fuel hedge adjustments, the company reported adjusted net income of $326 million, or $2.63 per diluted share, compared to $237 million, or $1.91 per diluted share in 2018.

“Our teams at Alaska, Horizon and McGee delivered industry-leading customer service and operational reliability that helped drive strong third quarter results,” said Alaska Air Group CEO Brad Tilden. “Our adjusted pretax profit margin of nearly 18% was 3.6 percentage points higher than last year – fueled by our commitment to keep costs low and by the impressive 8% revenue growth that our commercial team delivered. I want to thank our employees for everything they’re doing to make Alaska what we are today – and for helping us shape what we’re going to be in the future. They are the best in the industry, and I believe these results demonstrate that.”

The following table reconciles the company’s reported GAAP net income and earnings per diluted share (diluted EPS) for the three and nine months ended Sept. 30, 2019 and 2018 to adjusted amounts.

Statistical data, as well as a reconciliation of the reported non-GAAP financial measures, can be found in the accompanying tables. A glossary of financial terms can be found on the last page of this release.

Alaska Airlines aircraft photo gallery (Boeing):

Alaska Air Group returns two Q400 to service due to the 737 MAX 9 delays

Alaska Horizon (Horizon Air) Bombardier DHC-8-402 (Q400) N447QX (msn 4364) SEA (Michael B. Ing). Image: 947263.

The Alaska Air Group has announced in its filing that two of the three Boeing 737-MAX 9 aircraft that were originally scheduled for delivery in 2019 have been shifted to 2020 in light of the recent MAX grounding, based on the best estimate of the expected delivery dates.

Two Bombardier Q400 aircraft (above) that were previously removed from the operating fleet will be returning to revenue service. The expect changes are expected to occur in late 2019.

The Group also updated and outlined its fleet plans in the filing below:

The Alaska Air Groups, Inc. quarterly report to the United States Securities and Exchange Commission:

At June 30, 2019, the Company had operating leases for 10 Boeing 737 (B737), 62 Airbus, and 9 Bombardier Q400 aircraft. Additionally, the Company operates 32 Embraer 175 (E175) aircraft through its capacity purchase arrangement with SkyWest Airlines, Inc. (SkyWest). Remaining lease terms for these aircraft extend up to 12 years, with options to extend, subject to negotiation at the end of the term. As extension is not certain, and rates are highly likely to be renegotiated, the extended term is only capitalized when it is reasonably determinable. While aircraft rent is primarily fixed, certain leases contain rental adjustments throughout the lease term which would be recognized as variable expense as incurred. Variable lease expense for aircraft was $1 million and $2 million for the three and six months ended June 30, 2019, respectively.

Capacity purchase agreements with aircraft (CPA aircraft)

At June 30, 2019, Alaska had CPAs with three carriers, including the Company’s wholly-owned subsidiary, Horizon. Horizon sells 100% of its capacity under a CPA with Alaska. Alaska also has CPAs with SkyWest to fly certain routes in the Lower 48 and Canada, and with Peninsula Aviation Services, Inc., (PenAir) to fly certain routes in the state of Alaska. Under these agreements, Alaska pays the carriers an amount which is based on a determination of their cost of operating those flights and other factors intended to approximate market rates for those services. As Horizon is a wholly-owned subsidiary, intercompany leases between Alaska and Horizon have not been recognized under the standard. The agreement with PenAir does not contain a leasing arrangement, resulting in no asset or liability recognized.

Remaining lease terms for CPA aircraft range from 8 years to 11 years. Financial arrangements of the CPAs include a fixed component, representing the costs to operate each aircraft and is capitalized under the new lease accounting standard. CPAs also include variable rent based on actual levels of flying, which is expensed as incurred. Variable lease expense for CPA aircraft for the three and six months ended June 30, 2019 was not material.

As of June 30, 2019, the Company has one scheduled lease delivery of an A321neo aircraft remaining in 2019, valued at $52 million. We also had three scheduled lease deliveries of E175 aircraft in 2021 to be operated by SkyWest. Subsequent to June 30, 2019, the Company canceled these aircraft deliveries through an amendment to the capacity purchase agreement. All future lease contracts have remaining non-cancelable lease terms ranging from 2019 to 2033.

Aircraft purchase commitments include non-cancelable contractual commitments for aircraft and engines.

As of June 30, 2019, the Company had commitments to purchase 32 Boeing 737 MAX 9 aircraft, with deliveries in the remainder of 2019 through 2023. Future minimum contractual payments for these aircraft have been updated to reflect the most current anticipated delivery timing for Boeing 737 MAX 9 aircraft, which has been delayed as a result of the grounding order mandated by the FAA on March 13, 2019.

The Company also has commitments to purchase five E175 aircraft with deliveries in the remainder of 2019 through 2021 and has cancelable purchase commitments for 30 Airbus A320neo aircraft with deliveries from 2023 through 2025. In addition, the Company has options to purchase 37 B737 MAX aircraft from 2021 through 2024 and 30 E175 aircraft from 2021 through 2023. The Company also has the option to increase capacity flown by SkyWest with eight additional E175 aircraft with deliveries from 2021 to 2022.

Aircraft Commitments

As of June 30, 2019, we have firm orders to purchase or lease 41 aircraft. We also have cancelable purchase commitments for 30 Airbus A320neo with deliveries from 2023 through 2025. We could incur a loss of pre-delivery payments and credits as a cancellation fee. We also have options to acquire 37 B737 aircraft with deliveries from 2021 through 2024 and 30 E175 aircraft with deliveries from 2021 through 2023. In addition to the 32 E175 aircraft currently operated by SkyWest in our regional fleet, we have options in future periods to add regional capacity by E175 aircraft.

The following table summarizes expected fleet activity by year as of June 30, 2019, and are subject to change:

Top Copyright Photo: Alaska Horizon (Horizon Air) Bombardier DHC-8-402 (Q400) N447QX (msn 4364) SEA (Michael B. Ing). Image: 947263.

Alaska Horizon aircraft slide show: