Category Archives: Alaska Air Group

Alaska Air Group reports a third quarter GAAP net profit of $198 million

Alaska Air Group, Inc., (Alaska Airlines and Horizon Air) (Seattle/Tacoma) today reported third quarter 2014 GAAP net income of $198 million, or $1.45 per diluted share, compared to $289 million, or $2.04 per diluted share in the third quarter of 2013. Excluding the impact of mark-to-market fuel hedge adjustments and a one-time special revenue item in the prior year, the company reported record adjusted net income of $200 million, or $1.47 per diluted share, compared to adjusted net income of $157 million, or $1.11 per diluted share, in 2013.

“This was our best quarterly result ever” said CEO Brad Tilden. “I want to thank our 13,000 employees who are keeping a focus on playing our game, and working hard every day to run a great operation, keep fares low, and deliver award winning service to our customers. All of us at Alaska would like to thank our customers for their continued loyalty.”

Financial Highlights:

Reported record third quarter net income, excluding special items, of $200 million – a 27% increase over the third quarter of 2013.
Reported adjusted earnings per share of $1.47 per diluted share, a 32% increase over the third quarter of 2013 and ahead of First Call analyst consensus estimate of $1.42 per share.
Earned net income for the third quarter under Generally Accepted Accounting Principles (GAAP) of $198 million or $1.45 per diluted share, compared to net income of $289 million, or $2.04 per diluted share in 2013.
Recorded $84 million of incentive pay through the first nine months of 2014. This includes each Air Group employee earning at least $800 by meeting or exceeding monthly customer satisfaction and operational performance goals and tracking to earn above-target payouts for full-year goals.
Increased fuel efficiency (as measured by seat-miles per gallon) by 2.8% as part of our effort to be the airline leader in environmental stewardship.
Grew passenger revenues by 7%, compared to the third quarter of 2013.
Generated record adjusted pretax margin in the third quarter of 21.8% compared to 18.4% in 2013.
Generated 15.9% pretax margin for the trailing 12-month period ended Sept. 30, 2014, compared to 11.7% for the same period in the prior year.
Achieved trailing 12-month after-tax return on invested capital of 17.2% compared to 13.0% in the 12-month period ended Sept. 30, 2013.
Repurchased 3.4 million shares of common stock for $159 million in the third quarter of 2014, and 5.3 million shares for $242 million in the first nine months of 2014, representing 3.8% of the total shares outstanding at the beginning of the year.
Paid a $0.125 per-share quarterly cash dividend on September 4, bringing total dividend payments so far this year to $51 million.
Generated $1 billion in operating cash flows for the 12-months ended Sept. 30, 2014, generating $321 million of free cash flows.
Lowered adjusted debt-to-total-capitalization ratio to 31%.
Held $1.3 billion in unrestricted cash and marketable securities as of Sept. 30, 2014.
Became one of only two U.S. airlines with investment grade credit ratings.

Alaska Airlines:

Alaska Horizon-Horizon Air:

Despite increased competition from Delta, Alaska Airlines’ traffic and passenger numbers increase but the load factor drops

Alaska Air Group Inc. (Alaska Airlines and Horizon Air) (Seattle/Tacoma) despite increased competition, especially from Delta Air Lines (Atlanta) at its Seattle/Tacoma hub, has managed to increase its traffic and passenger numbers for the first nine months of 2014, mostly through its vigorous expansion. However the number of passengers has not kept up with the expansion and this has lead to a lower load factor.

The Group reported September and year-to-date operational results for its subsidiaries, Alaska Airlines and Horizon Air, and on a combined basis. Detailed information is provided below.

Air Group:

On a combined basis, Air Group reported a 9.0 percent increase in traffic on a 9.9 percent increase in capacity compared to September 2013. This resulted in a 0.7 point decrease in load factor to 81.9 percent. These statistics include flights operated by Alaska and those under capacity purchase agreements, including Horizon, SkyWest and PenAir.

The following table shows the operational results for September and year-to-date 2014, compared to the prior-year periods:

The Group and Alaska Airlines:

Alaska Horizon – Horizon Air:

Copyright Photo: Arnd Wolf/AirlinersGallery.com. Alaska Airlines’ Boeing 737-890 N569AS (msn 35184) in the 75th Anniversary retrojet scheme arrives in Las Vegas.

Alaska Airlines:

Alaska Horizon:

Alaska Air Group reports a net profit of $165 million for the second quarter

Alaska Air Group, Inc., (Alaska Airlines and Horizon Air) (Seattle/Tacoma) today reported second quarter 2014 GAAP net income of $165 million, or $1.19 per diluted share, compared to $104 million, or $0.74 per diluted share in the second quarter of 2013. Excluding the impact of mark-to-market fuel hedge adjustments of $13 million ($8 million after tax, or $0.06 per diluted share), the company reported record adjusted net income of $157 million, or $1.13 per diluted share, compared to adjusted net income of $105 million, or $0.74 per diluted share, in 2013.

Read the full report: CLICK HERE

Copyright Photo: Mark Durbin/AirlinersGallery.com. Alaska Airlines has already added Aviation Partners Boeing Split Scimitar Winglets to 12 Boeing 737 aircraft. Boeing 737-890 N588AS (msn 35685) with SS Winglets taxies at San Francisco.

Alaska Airlines:

Alaska Horizon:

Horizon Air:

Alaska Air Group’s board approves a $650 million buy back

Alaska Air Group’s board of directors (Alaska Airlines and Horizon Air) (Seattle/Tacoma) has approved a share repurchase program authorizing the company to buy back up to $650 million of its common stock. This share repurchase program represents approximately 10 percent of the market capitalization of the company.

The board also approved a quarterly cash dividend of 25 cents per share as part of Air Group’s program to be a leader in returning capital to investors. The dividend to all shareholders of record as of May 20 will be paid on June 4.

The $650 million repurchase program will begin immediately after the existing $250 million buyback is completed.

AAG intends to finance the dividend and stock repurchases with cash on hand and cash flow from operations.

The program allows the company to repurchase its common stock using open market stock purchases, negotiated transactions or through other means, including accelerated share repurchases and 10b5-1 trading plans.

This will be Alaska’s eighth repurchase program since 2007. The company has spent $519 million buying back more than 21 million shares of its stock.

Alaska Air Group began paying a quarterly dividend of 20 cents per share in August 2013, the first time since 1992 that the company had paid a dividend. It was increased to 25 cents per share this past February.

Copyright Photo: Alaska Airlines’ Boeing 737-490 N791AS (msn 28886) taxies at Los Angeles International Airport in the special “Follow Me to Disneyland” color scheme.

Alaska Airlines:

Alaska Horizon:

Horizon Air:

Alaska Air Group reports GAAP net income of $94 million for the first quarter

Alaska Air Group, Inc. (Alaska Airlines and Horizon Air – Alaska Horizon) (Seattle/Tacoma) today reported first quarter 2014 GAAP net income of $94 million, or $1.35 per diluted share, compared to $37 million, or $0.51 per diluted share in the first quarter of 2013. Excluding the impact of mark-to-market fuel hedge adjustments of $8 million ($5 million after tax, or $0.07 per diluted share), the company reported record adjusted net income of $89 million, or $1.28 per diluted share, compared to adjusted net income of $44 million, or $0.62 per diluted share, in 2013.

“Our record first quarter results reflect strong demand for our service and the efforts we’ve taken to improve the value we bring to our customers,” CEO Brad Tilden said. “Our solid foundation of award-winning service, excellent operational performance, low costs and low fares, and the best employees in the business will help us sustain our success in the face of increasing competition.”

Financial Highlights:

Reported record first quarter net income, excluding special items, of $89 million, or $1.28 per diluted share, compared to adjusted net income of $44 million, or $0.62 per diluted share in the prior-year quarter. This quarter’s results compare to a First Call analyst consensus estimate of $1.24 per share.

Recorded net income for the first quarter under Generally Accepted Accounting Principles (GAAP) of $94 million or $1.35 per diluted share, compared to net income of $37 million, or $0.51 per diluted share in 2013.

Reported record adjusted pretax margin for the first quarter of 11.8%.

Achieved trailing 12-month return on invested capital of 14.8% compared to 13.4% in the 12 months ended March 31, 2013.

Paid a $0.25 per-share quarterly cash dividend on March 11 totaling $17 million. This is a 25% increase from the previous cash dividend payment of $0.20 per-share.

Repurchased 352,851 shares of common stock for $30 million in the first quarter of 2014.

Lowered adjusted debt-to-total-capitalization ratio by 3%, to 32%, from December 31, 2013.

Held $1.4 billion in unrestricted cash and marketable securities as of March 31, 2014.

Top Copyright Photo: Michael B. Ing/AirlinersGallery.com. Dedicated freighter operations at Alaska Air Cargo becomes very active in Alaska this time of the year. Boeing 737-490 (F) N709AS (msn 28896) touches down at Ted Stevens Anchorage International Airport (ANC).

Alaska Airlines:

Alaska Horizon:

Horizon Air:

Bottom Copyright Photo: Michael B. Ing/AirlinersGallery.com. Horizon Air’s (Alaska Horizon) Bombardier DHC-8-402 (marketed as the “Q400”) N440QX (msn 4347) in the special Oregon State University-OSU Beavers color scheme taxies to the runway at the Seattle-Tacoma International Airport (SEA) hub.

Alaska Airlines and the IAM tentatively agree on a new five-year contract

Alaska Airlines (Seattle/Tacoma) and the International Association of Machinists and Aerospace Workers (IAM) have reached a tentative agreement on a new five-year contract for the carrier’s 2,500 clerical, office and passenger service employees.

The proposed contract includes pay raises and job security provisions, among other improvements.

The current three-year contract became amendable on January 1. Results of a ratification vote on the new contract are expected in early April. Contracts in the airline industry do not expire. Once they become amendable, the current contract remains in effect until a new agreement is ratified.

Copyright Photo: James Helbock/AirlinersGallery.com. Boeing 737-890 N570AS (msn 35185) decorated in the “Follow Us to Disneyland Resort – Disney Cars” motif arrives in Los Angeles.

Alaska Airlines:

Horizon Air paints its two new Bombardier Q400 Nanook and Seawolf planes

Horizon Air (Alaska Horizon) has released this statement and videos:

Nanook and Seawolf fans can now watch school spirit come to life in two new time-lapse videos. Set to school songs provided by each university, the videos show the painting of Alaska Airlines’ newest university-themed aircraft, celebrating the University of Alaska Anchorage (N443QX) and the University of Alaska Fairbanks (N441QX).

The spirited paint themes feature school colors and mascots from each university. The aircraft will begin flying primarily between Anchorage and Fairbanks and Anchorage and Kodiak when Alaska Airlines’ sister carrier, Horizon Air, introduces the Bombardier DHC-8-402 (Q400) to the state of Alaska on March 3.

Fifty painters from Associated Painters in Spokane, Wash., worked on each plane, taking six days, using 15,360 linear feet of masking tape, and channeling some serious university pride.

The UAF and UAA planes are the 10th and 11th university-themed aircraft flown by Horizon since 2008. Other paint themes represent the universities of Idaho, Montana, Oregon and Washington, as well asBoise State, Montana State, Oregon State, San Diego State and Washington State. Alaska Airlines recently unveiled the “Spirit of Education,” a specially themed Boeing 737-900ER dedicated to the students and staff of Raisbeck Aviation High School in Tukwila, Wash.

Horizon Air is a subsidiary of Alaska Air Group and flies to 39 cities in the western United States, Canadaand Mexico.

About the University of Alaska Fairbanks
The University of Alaska Fairbanks is the state’s Land, Sea and Space Grant institution, enriching the lives of Alaskans through teaching, research and service at campuses in Fairbanks, Kotzebue, Nome, Betheland Dillingham; six campus centers in interior Alaska and the Aleutians; and dozens of sites throughout the state. As Alaska’s research university and a world leader in arctic research, UAF offers scientists and students unparalleled opportunities in Alaska’s vast dynamic laboratory. Founded in 1917, UAF is the birthplace of the University of Alaska system and continues to inspire innovation throughout Alaska’sdiverse communities.

About the University of Alaska Anchorage
The University of Alaska Anchorage is an intersection for academic exploration, adventure and transformative experiences in and out of the classroom. Alaska’s largest university, UAA houses colleges and schools in Anchorage, the Matanuska-Susitna Valley, Kenai, Homer, Kodiak and Valdez. UAA students experience hands-on education through academics, research, leadership opportunities and mentorship with our community partners in state, across the country and globally.

Alaska Horizon:

Horizon Air:

Videos: Horizon Air: N443QX above and N441QX below:

Alaska Air Group reports 4Q net income of $78 million and $508 net income for 2013, a new record

Alaska Air Group Inc. (Alaska Airlines and Horizon Air) (Seattle/Tacoma) today reported fourth quarter 2013 GAAP net income of $78 million, or $1.11 per diluted share, compared to GAAP net income of $44 million, or $0.61 per diluted share in 2012. Excluding mark-to-market fuel hedge gains of $2 million ($1 million after tax, or $0.01 per diluted share), the company reported record fourth quarter 2013 net income of $77 million, or $1.10 per diluted share, compared to net income excluding mark-to-market fuel hedge losses of $50 million, or $0.70 per diluted share, in 2012.

The company reported full-year 2013 GAAP net income of $508 million, compared to $316 million in the prior year. Excluding the impact of the items noted in the table below, the company reported record net income of $383 million, or $5.40 per diluted share for 2013, compared to net income of $339 million, or $4.73 per diluted share in 2012. This marks the fourth year in a row the company has exceeded its goal of a 10 percent return on invested capital.

The following table reconciles the company’s adjusted net income and earnings per diluted share (EPS) during the full year and fourth quarters of 2013 and 2012 to amounts as reported in accordance with GAAP:

	Three Months Ended Dec. 31,
	2013				2012
(in millions, except per share amounts)	Dollars		Diluted EPS		Dollars		Diluted EPS
Reported GAAP net income	$	78	$	1.11	$	44	$	0.61
Mark-to-market fuel hedge adjustments, net of tax	(1)		(0.01)		6		0.09
Non-GAAP adjusted income and per share amounts	$	77	$	1.10	$	50	$	0.70

	12 Months Ended Dec. 31,
	2013				2012
(in millions, except per share amounts)	Dollars		Diluted EPS		Dollars		Diluted EPS
Reported GAAP net income	$	508	$	7.16	$	316	$	4.40
Mark-to-market fuel hedge adjustments, net of tax	(5)		(0.06)		23		0.33
Special mileage plan revenue, net of tax	$	(120)	$	(1.70)	$	—	$	—
Non-GAAP adjusted income and per share amounts	$	383	$	5.40	$	339	$	4.73

Financial Highlights:

Record fourth quarter net income, excluding special items, of $77 million, or $1.10 per diluted share, compared to $50 million, or $0.70 per diluted share in 2012. This quarter’s results compare to a First Call analyst consensus estimate of $1.07 per share.
Record full-year net income, excluding special items, of $383 million, or $5.40 per diluted share, compared to$339 million, or $4.73 per diluted share in 2012.
Net income for the fourth quarter under Generally Accepted Accounting Principles (GAAP) of $78 million, or$1.11 per diluted share, compared to net income of $44 million, or $0.61 per diluted share in 2012. Full-year GAAP net income of $508 million, or $7.16 per diluted share, compared to net income of $316 million, or $4.40per diluted share in 2012.
Air Group employees earned $105 million in incentive pay in 2013, or nearly five weeks of pay for most employees. Over the last four years, employees have earned more than $357 million in incentive pay, averaging 8.8% of annual pay for most employees.
Achieved return on invested capital of 13.6% in 2013, compared to 13% in 2012.
Lowered adjusted debt-to-total capitalization ratio to 35% as of Dec. 31, 2013.
Fully funded the company’s defined benefit pension plans in 2013.
Held $1.3 billion in unrestricted cash and marketable securities as of Dec. 31, 2013.
Repurchased 2,492,093 shares of common stock for approximately $159 million in 2013. Since 2007, Air Group has used $478 million to repurchase 21 million shares.
Modified affinity card agreement with Bank of America and extended through 2017, estimated to generate $55 million in additional cash flows annually.
Received a credit rating upgrade from Standard and Poor’s to “BB+” with a stable outlook.

Other Highlights and Achievements:

Ranked “Highest in Customer Satisfaction Among Traditional Network Carriers” by J.D. Power for the sixth year in a row.
Ranked as the best U.S. major airline by The Wall Street Journal’s “Middle Seat” scorecard.
Named Airline Industry Leader in the 2013 Temkin Customer Service Rankings.
Held the top spot in U.S. Department of Transportation on-time performance among major U.S. airlines for the 12 months ended November 2013.
Alaska Airlines received the FAA’s “Diamond Certificate of Excellence” award for the 12th consecutive year; and Horizon Air received the certificate for the 12th time in the last 14 years.
Improved employee productivity in 2013 by 4.0% compared to 2012.
Signed five-year collective bargaining agreements with Alaska pilots and Horizon flight attendants.
Named most fuel-efficient airline in the U.S. in a report released by the International Council on Clean Transportation.
Donated $7.6 million to more than 1,300 charitable organizations, including support for the grand opening of Aviation High School in Seattle and other educational efforts. Our employees also volunteered more than 10,500 hours of community service.
Signed an exclusive multi-year partnership with Seattle Seahawks quarterback, Russell Wilson, and named him our “Chief Football Officer.”

New routes:

New routes launched and announced in the fourth quarter are as follows:

New Nonstop Routes Launched in Q4	New Nonstop Routes (Launch Date)
Seattle – Colorado Springs	Portland – Salt Lake City (6/9/14)
Portland – Tucson	San Diego – Salt Lake City (6/10/14)
Portland – Boise	Los Angeles – Salt Lake City (6/11/14)
San Diego – Boise	San Jose – Salt Lake City (6/12/14)
Seattle – Omaha	Boise – Salt Lake City (6/16/14)
Portland – Reno	Las Vegas – Salt Lake City (6/16/14)
Seattle – Steamboat Springs	San Francisco – Salt Lake City (6/18/14)
Anchorage – Phoenix
Anchorage – Las Vegas
San Diego – Mammoth Lakes

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Boeing 737-990 N318AS (msn 30018) in the “We’re Going to Disneyland Resort” special livery arrives in Los Angeles.

Alaska Airlines:

Alaska Horizon:

Horizon Air:

Alaska Air Group reports 3Q net income of $289 million

Alaska Air Group, Inc., (Alaska Airlines and Horizon Air) (Seattle/Tacoma) reported third quarter 2013 GAAP net income of $289 million, or $4.08 per diluted share, compared to $163 million, or $2.27 per diluted share in the third quarter of 2012. Excluding the impact of mark-to-market fuel hedge adjustments of $20 million ($12 million after tax, or $0.17 per diluted share), and a one-time special revenue item of $192 million ($120 million after tax, or $1.70 per diluted share) that primarily resulted from the application of new accounting rules associated with the modified affinity card agreement, the company reported record adjusted net income of $157 million, or $2.21 per diluted share, compared to adjusted net income of $150 million, or $2.09 per diluted share, in 2012.

“These results represent our best quarter ever and mark Alaska’s 18th consecutive quarterly profit,” Alaska Air Group CEO Brad Tilden said. “This is noteworthy given significant additional competition in some of our core markets. The balance and strength of our network combined with the ability of our people to respond quickly to changing business conditions are enabling us to succeed in this highly competitive industry.”

The following table reconciles the company’s reported GAAP net income and earnings per diluted share (EPS) during the third quarters of 2013 and 2012 to adjusted amounts:

	Three Months Ended September 30,
	2013				2012
(in millions, except per-share amounts)	Dollars		Diluted EPS		Dollars		Diluted EPS
Reported GAAP net income	$	289	$	4.08	$	163	$	2.27
Mark-to-market fuel hedge adjustments, net of tax	(12)		(0.17)		(13)		(0.18)
Special revenue item, net of tax	(120)		(1.70)		—		—
Non-GAAP adjusted income and per-share amounts	$	157	$	2.21	$	150	$	2.09

Financial Highlights:

Reported record third quarter net income, excluding special items, of $157 million, or $2.21 per diluted share, compared to adjusted net income of $150 million, or $2.09 per diluted share in the prior-year quarter. This quarter’s results compare to a First Call analyst consensus estimate of $2.14 per share.
Recorded net income for the third quarter under Generally Accepted Accounting Principles (GAAP) of $289 million or $4.08 per diluted share, compared to net income of $163 million, or $2.27 per diluted share in 2012.
Achieved trailing 12-month return on invested capital of 13.0 percent compared to 12.7 percent in the 12 months ended Sept. 30, 2012.
Lowered adjusted debt-to-total-capitalization ratio by 7.0 percentage points, to 47.0 percent, from Dec. 31, 2012.
Paid a $0.20 per-share quarterly cash dividend on August 22 totaling $14 million. This is the first time since 1992 that Alaska Air Group has paid a dividend.
Repurchased 537,008 shares of common stock for $32 million in the third quarter. For the year, the company has repurchased 1,454,790 shares for $83 million.
Modified the affinity card agreement with Bank of America and extended it through 2017, estimated to generate $55 million in additional cash flows on an annual basis.
Held $1.4 billion in unrestricted cash and marketable securities as of Sept. 30, 2013.

Operational Highlights:

Held the No. 1 spot in U.S. Department of Transportation on-time performance among the 10 largest U.S. airlines for the 12 months ended August 2013.
Named most fuel-efficient airline in the U.S. in a report released by the International Council on Clean Transportation.
Named Airline Industry Leader in the 2013 Temkin Customer Service Rankings.
Surpassed 1 million customer downloads of the Alaska Airlines mobile apps.
Began new routes between Portland and Atlanta and between Portland and Dallas.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Alaska Airlines’ Boeing 737-890 WL N560AS (msn 35179) in the “Spirit of the Islands” motif departs from Los Angeles.

Alaska Airlines:

Alaska Horizon-Horizon Air:

Horizon Air to use Q400 warm air bridges at Fairbanks, Alaska

Alaska Airlines (Seattle/Tacoma) has issued this statement for its Alaska Horizon (Horizon Air) Bombardier DHC-8-402 (Q400) cold weather operations in Fairbanks, Alaska:

Fairbanks residents flying on Alaska Airlines’ Bombardier Q400s starting next March will board and deplane the aircraft using the existing jet bridge at Fairbanks International Airport. The carrier will modify the jet bridge at Gate 1 to provide passengers with warm, easy access to their flights on the turboprop aircraft.

“We listened to customer concerns about boarding the plane outside during the winter and took our time to carefully evaluate all of our options,” said Marilyn Romano, Alaska Airlines’ regional vice president – Alaska. “With slight modifications to the existing jet bridge, our customers traveling between Fairbanks and Anchorage will have a way to board and deplane that protects them from the cold winter weather and is also safe and accessible for travelers with limited mobility.”

Alaska Airlines is exploring a warm boarding solution for customers boarding and deplaning the Q400 at Ted Stevens International Airport in Anchorage, Romano said.

Starting next March, Alaska will increase service between Anchorage and Fairbanks from seven to nine daily flights; eight flights will be operated with the Q400 and one with a Boeing 737. Additionally, the Q400 will replace an Alaska 737 on one of two daily round-trip flights between Anchorage and Kodiak. Initial service to Kodiak will begin March 3 and end April 30, then resume again for seasonal service between October and April.

Alaska Horizon:

Alaska Airlines: