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 $2.09 per diluted share, in 2012.
“These results represent our best quarter ever and mark Alaska’s 18th consecutive quarterly profit,” Alaska Air Group CEO Brad Tilden said. “This is noteworthy given significant additional competition in some of our core markets. The balance and strength of our network combined with the ability of our people to respond quickly to changing business conditions are enabling us to succeed in this highly competitive industry.”
The following table reconciles the company’s reported GAAP net income and earnings per diluted share (EPS) during the third quarters of 2013 and 2012 to adjusted amounts:
|Three Months Ended September 30,|
|(in millions, except per-share amounts)||Dollars||Diluted EPS||Dollars||Diluted EPS|
|Reported GAAP net income||$||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|
- 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.
- 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.