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Alaska Air Group reports net income of $163.4 million in the third quarter


Alaska Air Group, Inc. (Alaska Airlines and Horzon Air) (Seattle/Tacoma) reported third quarter 2012 GAAP net income of $163.4 million, or $2.27 per diluted share, compared to $77.5 million, or $1.06 per diluted share in 2011. Excluding the favorable impact of mark-to-market fuel hedge adjustments of $21.2 million ($13.1 million after tax, or $0.18 per diluted share), the company reported record third quarter 2012 net income of $150.3 million, or $2.09 per diluted share, compared to net income excluding special items of $131.1 million, or $1.79 per diluted share, in 2011.

Third quarter highlights with comparison to 2011:

  • Reported record third quarter net income, excluding special items, of $150.3 million, or $2.09 per diluted share, compared to adjusted net income of $131.1 million, or $1.79 per diluted share. This quarter’s results compare to a First Call mean estimate of $2.08 per share.
  • Earned net income under Generally Accepted Accounting Principles (GAAP) of $163.4 million, or $2.27 per diluted share, compared to net income of $77.5 million, or $1.06 per diluted share.
  • 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 2012.
  • Announced a new $250 million share repurchase program, representing approximately 10 percent of our market capitalization, while completing our previously announced $50 million share repurchase program.
  • Achieved trailing 12-month return on invested capital of 12.7 percent, compared to 12.0 percent in the 12 months ended Sept. 30, 2011.
  • Lowered adjusted debt-to-total capitalization ratio by 8 points, to 54 percent, since Dec. 31, 2011.
  • Held $1.2 billion in unrestricted cash and marketable securities as of Sept. 30, 2012.
  • Received “2012 Global Vision Award” by Travel + Leisure magazine for Alaska Airlines’ sustainability efforts.

New routes:

  • Began new service between Seattle and Fort Lauderdale, Fla.; Portland, Ore., and Washington, D.C.; and Seattle and San Antonio in the third quarter.
  • Announced expanded service between Los Angeles and Anchorage beginning in summer 2013.

Boeing order:

  • Signed an aircraft purchase agreement with Boeing for 50 new 737 aircraft, including 37 of Boeing’s new 737 MAX aircraft with deliveries expected in 2015 through 2024. This order positions Alaska to replace aging aircraft over the next decade and grow the fleet, assuming profitability and return-on-invested-capital targets can be met.

The following table reconciles the company’s reported GAAP net income and earnings per diluted share (EPS) during the third quarters of 2012 and 2011 to adjusted amounts:

Three Months Ended September 30,
2012 2011
(in millions, except per share amounts) Dollars Diluted EPS Dollars Diluted EPS
Reported GAAP net income $ 163.4 $ 2.27 $ 77.5 $ 1.06
Fleet transition costs, net of tax 1.2 0.02
Mark-to-market fuel hedge adjustments, net of tax (13.1) (0.18) 52.4 0.71
Non-GAAP adjusted income and per share amounts $ 150.3 $ 2.09 $ 131.1 $ 1.79

Copyright Photo: Nick Dean. Alaska Airlines’ Boeing 737-490 N791AS (msn 28886) decorated as “Follow Me to Disneyland/50 Years” completes its final approach into the Seattle/Tacoma hub.

All of the Horizon Air aircraft have now been rebranded as Alaska Horizon.

Alaska Airlines: 

Alaska Horizon (Horizon Air):