News releases
View printer-friendly version
Alaska Air Group Reports Third Quarter Results
SEATTLE--(BUSINESS WIRE)--Oct. 18, 2001--Alaska Air Group, Inc. (NYSE:ALK) today reported a net profit of $25.3 million ($0.95 per share), or $7.3 million ($0.27 per share) excluding federal financial assistance received following the September 11 terrorist attacks. That compares with a profit of $15.9 million ($0.60 per share) in the third quarter of last year.
"Prior to the tragic events of September 11, both Alaska and Horizon were building on momentum established in the second quarter," said Chairman and CEO John F. Kelly. "Passenger traffic was continuing to run counter to the industry trend, and we were making good progress on our cost management initiatives at both carriers.
"Like all airlines, though, we were severely affected by the events of September 11. Thankfully, President Bush and Congress recognized the potentially devastating impact on our industry, and how vital it is to the economy. By passing the Air Transportation Safety and System Stabilization Act, they enabled us to avoid layoffs and the extremely detrimental impact those layoffs would have had on our people -- our most important and vital strategic asset."
Alaska Air Group received $29.1 million ($18 million after tax or 68 cents per share) from the Stabilization Act to cover September's post-attack losses. Without the federal aid, the company's net income for the quarter would have been its worst third-quarter performance in nearly a decade.
Although fuel prices in the quarter were still historically high, they were 13 percent lower than a year ago and resulted in a pre-tax savings of $13.2 million in fuel expense compared with last year's third quarter.
Operationally, Alaska Airlines' passenger traffic in the third quarter increased 3.2 percent on a capacity increase of 4.3 percent. Load factor decreased 0.8 points to 71.0 percent. The airline's operating revenue per available seat mile (ASM) decreased 5.0 percent, while its operating cost per ASM decreased 1.3 percent. Alaska's pretax income was $31.3 million compared to $35.0 million a year earlier. Alaska's results include $18.7 million of pre-tax compensation from the U.S. government.
At Horizon Air, the fallout of the September 11 attacks was even more pronounced because of its higher number of short-haul markets, where travelers can choose to drive. Its share of the federal aid package -- $10.4 million -- was entirely consumed by the last 20 days of September. Horizon's passenger traffic for the third quarter decreased 8.6 percent on an 8.5 percent capacity decrease. Its load factor decreased 0.1 points to 64.3 percent. The airline's operating revenue per ASM decreased 3.7 percent, while its operating cost per ASM increased 2.3 percent. Horizon's pretax income was $7.2 million, compared to $3.9 million a year earlier. This year's results include the $10.4 million of pre-tax compensation from the government plus manufacturer support for delays in delivery of aircraft.
Horizon's quarter also included two milestones: Signing of the first-ever collective bargaining agreement with its pilots, and securing financing for future aircraft deliveries.
"Our challenge for the fourth quarter and beyond is to focus even more intently on doing everything possible to control costs and stimulate incremental traffic to boost revenue," said Kelly. "Customers are gradually returning, which is good news. Of course, we're operating about 85 percent of our schedule and lower fares are depressing yield. But we're getting people back flying again. We're encouraged by what we've seen so far this month and plan to get the Alaska Airlines portion of our operation back to 100 percent by February 10. But the fact is that the number of passengers at this point, and the fares they're paying, won't make for a quick turnaround, so the final installment of federal aid will help us turn the corner. And our plan for next year should position us well to take advantage of any rebound in the economy."
This report may contain forward-looking statements that are based on the best information currently available to management. These forward-looking statements are intended to be subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are indicated by phrases such as "will," "should," "the Company believes," "we expect" or any other language indicating a prediction of future events. There can be no assurance that actual developments will be those anticipated by the Company. Actual results could differ materially from those projected as a result of a number of factors, some of which the Company cannot predict or control. For a discussion of these factors, please see Item 1 of the Company's Annual Report on Form 10-K for the year ended December 31, 2000.
Alaska Air Group is the parent company of Alaska Airlines, Inc. and Horizon Air Industries, Inc.
ALASKA AIR GROUP, INC.
CONSOLIDATED STATEMENT OF INCOME
(In millions, except per share amounts)
Quarter Nine Months
Ended September 30 Ended September 30
-------------------- --------------------
2000 2001 2000 2001
------- ------- --------- ----------
Operating Revenues:
Passenger $ 565.7 $ 536.8 $ 1,535.8 $ 1,550.9
Freight and mail 22.7 22.6 66.2 67.3
Other -- net 13.9 24.0 42.8 60.5
------- ------- --------- ----------
Total Operating Revenues 602.3 583.4 1,644.8 1,678.7
------- ------- --------- ----------
Operating Expenses:
Wages and benefits 185.6 205.0 532.4 591.1
Contracted services 19.3 19.2 54.9 61.0
Aircraft fuel 100.5 85.6 273.7 265.1
Aircraft maintenance 52.0 42.7 137.6 138.0
Aircraft rent 46.0 46.0 139.1 138.5
Food and beverage service 14.3 15.2 40.4 44.6
Commissions 17.8 16.0 51.5 47.8
Other selling expenses 32.9 31.8 88.1 96.4
Depreciation and
amortization 27.9 33.7 75.3 95.2
Loss (gain) on sale
of assets (0.1) 0.3 (0.6) 1.5
Landing fees and
other rentals 27.0 33.8 73.3 92.8
Other 41.9 41.3 121.4 132.1
Special charge
-- Mileage Plan -- -- 24.0 --
------- ------- --------- ----------
Total Operating Expenses 565.1 570.6 1,611.1 1,704.1
------- ------- --------- ----------
Operating Income (Loss) 37.2 12.8 33.7 (25.4)
------- ------- --------- ----------
Interest income 6.0 7.1 16.4 20.9
Interest expense (9.3) (11.8) (25.1) (34.6)
Interest capitalized 4.1 1.6 11.3 7.5
U.S. government compensation -- 29.1 -- 29.1
Other -- net 0.6 (0.5) 1.7 (2.3)
------- ------- --------- ----------
1.4 25.5 4.3 20.6
------- ------- --------- ----------
Income (Loss) Before Income
Tax and Accounting Change 38.6 38.3 38.0 (4.8)
Income tax expense (credit) 22.7 13.0 22.5 (1.7)
------- ------- --------- ----------
Income (Loss) Before
Acct'g Change 15.9 25.3 15.5 (3.1)
Cumulative effect of
Accounting Change Net
of Income Tax -- -- (56.9) --
------- ------- --------- ----------
Net Income (Loss) $ 15.9 $ 25.3 $ (41.4) $ (3.1)
======= ======= ========= ==========
Basic Earnings (Loss)
Per Share:
Income before accounting
change $0.60 $0.95 $0.59 $(0.12)
Cumulative effect of
acct'g change -- -- (2.15) --
------- ------- --------- ----------
Net Income (Loss) $0.60 $0.95 $(1.56) $(0.12)
======= ======= ========= ==========
Diluted Earnings (Loss)
Per Share:
Income before accounting
change $0.60 $0.95 $0.59 $(0.12)
Cumulative effect of
acct'g change -- -- (2.15) --
------- ------- --------- ----------
Net Income (Loss) $0.60 $0.95 $(1.56) $(0.12)
======= ======= ========= ==========
Shares used for
computation:
Basic 26.444 26.514 26.438 26.489
Diluted 26.490 26.559 26.495 26.489
ALASKA AIR GROUP, INC.
CONSOLIDATED BALANCE SHEET December 31 September 30
--------------------------
(In millions) 2000 2001
--------------- ---------------
Cash and marketable securities $ 462 $ 667
===== =====
Total current assets 806 1,007
Property and equipment-net 1,730 1,866
Other assets 94 110
--- ----
Total assets $2,630 $2,983
====== ======
Current liabilities $ 711 $ 749
Long-term debt and capital
lease obligations 609 869
Other liabilities and credits 448 504
Shareholders' equity 862 861
---- ----
Total liabilities and equity $2,630 $2,983
====== ======
Alaska Airlines Financial and Statistical Data
Quarter Ended Nine Months Ended
September 30 September 30
------------------------ ------------------------
Financial Data % %
(in millions): 2000 2001 Change 2000 2001 Change
---- ---- ------ ---- ---- ------
Operating
Revenues:
Passenger $ 451.5 $ 441.8 (2.1) $1,221.6 $1,261.6 3.3
Freight and
mail 19.8 20.8 5.1 57.7 60.5 4.9
Other
-- net 13.0 17.4 33.8 40.7 47.3 16.2
-------- ------- -------- --------
Total
Operating
Revenues 484.3 480.0 (0.9) 1,320.0 1,369.4 3.7
-------- ------- -------- --------
Operating Expenses:
Wages and
benefits 150.3 166.6 10.8 431.2 479.4 11.2
Contracted
services 16.3 16.8 3.1 46.4 52.9 14.0
Aircraft
fuel 82.1 71.7 (12.7) 223.6 219.8 (1.7)
Aircraft
maintenance 32.3 32.2 (0.3) 90.8 95.4 5.1
Aircraft
rent 35.4 33.7 (4.8) 107.3 104.0 (3.1)
Food
and
beverage
service 13.5 14.5 7.4 38.0 42.4 11.6
Commissions 17.1 16.3 (4.7) 49.4 50.4 2.0
Other
selling
expenses 27.0 26.3 (2.6) 70.8 78.9 11.4
Depreciation
and
amortization 22.2 26.7 20.3 60.2 74.4 23.6
Loss on sale
of assets 0.4 0.6 NM 0.8 1.8 NM
Landing
fees and
other
rentals 19.9 25.9 30.2 54.4 70.7 30.0
Other 34.5 32.8 (4.9) 96.6 104.8 8.5
Special
charge
-- Mileage
Plan -- -- 24.0 -- NM
-------- ------- -------- --------
Total
Operating
Expenses 451.0 464.1 2.9 1,293.5 1,374.9 6.3
-------- ------- -------- --------
Operating
Income
(Loss) 33.3 15.9 (52.3) 26.5 (5.5) NM
-------- ------- -------- --------
Interest
income 6.9 7.9 19.3 24.2
Interest
expense (9.3) (11.9) (25.1) (34.6)
Interest
capitalized 3.2 1.0 8.8 4.8
U.S.
government
compensation -- 18.7 -- 18.7
Other -- net 0.9 (0.3) 1.7 (1.7)
-------- ------- -------- --------
1.7 15.4 4.7 11.4
-------- ------- -------- --------
Income Before
Income Tax
and
Accounting
Change $ 35.0 $ 31.3 (10.6) $ 31.2 $ 5.9 (81.1)
======== ======= ======== ========
Operating
Statistics:
Revenue
passengers
(000) 3,655 3,747 2.5 10,255 10,643 3.8
RPMs
(000,000) 3,226 3,328 3.2 9,088 9,514 4.7
ASMs
(000,000) 4,494 4,687 4.3 12,936 13,798 6.7
Passenger
load
factor 71.8% 71.0% (0.8)pts 70.3% 69.0% (1.3)pts
Breakeven
load
factor 66.8% 70.1% 3.3 pts 67.9% 71.1% 3.2 pts
Yield per
passenger
mile 13.99(cent) 13.27(cent) (5.2) 13.44(cent) 13.26(cent) (1.4)
Operating
revenue
per ASM 10.78(cent) 10.24(cent) (5.0) 10.20(cent) 9.92(cent) (2.7)
Operating
expenses
per
ASM(a) 10.04(cent) 9.90(cent) (1.3) 9.81(cent) 9.96(cent) 1.5
Expense
per ASM
excluding
fuel(a) 8.21(cent) 8.37(cent) 2.0 8.09(cent) 8.37(cent) 3.5
Fuel cost
per
gallon 104.6(cent) 90.1(cent) (13.9) 98.5(cent) 93.1(cent) (5.4)
Fuel
gallons
(000,000) 78.5 79.6 1.4 227.1 236.1 4.0
Average
number
of
employees 9,763 10,222 4.7 9,494 10,209 7.5
Aircraft
utilization
(blk hrs
/day) 10.8 10.3 (4.6) 10.7 10.8 0.9
Operating
fleet at
period-end 93 102 9.7 93 102 9.7
(a)Nine months-to-date excludes the impact of a special charge in June 2000.
Horizon Air Financial and Statistical Data
Quarter Ended Nine Months Ended
September 30 September 30
----------------------------- --------------------------
Financial
Data % %
(in millions): 2000 2001 Change 2000 2001 Change
---- ---- ------ ---- ---- ------
Operating
Revenues:
Passenger $ 117.4 $ 98.4 (16.2) $ 322.9 $ 301.0 (6.8)
Freight
and mail 2.8 1.9 (32.1) 8.4 6.8 (19.0)
Other -- net 1.7 7.2 323.5 4.7 15.6 231.9
-------- ------- -------- --------
Total
Operating
Revenues 121.9 107.5 (11.8) 336.0 323.4 (3.8)
-------- ------- -------- --------
Operating Expenses:
Wages and
benefits 35.3 38.4 8.8 101.2 111.7 10.4
Contracted
services 3.6 3.3 (8.3) 10.4 10.4 0.0
Aircraft
fuel 18.3 13.8 (24.6) 50.0 45.2 (9.6)
Aircraft
maintenance 19.7 10.5 (46.7) 46.8 42.6 (9.0)
Aircraft
rent 10.6 12.3 16.0 31.9 34.6 8.5
Food and
beverage
service 0.8 0.8 0.0 2.4 2.3 (4.2)
Commissions 3.8 3.0 (21.1) 10.8 9.0 (16.7)
Other selling
expenses 5.8 5.5 (5.2) 17.2 17.6 2.3
Depreciation
and
amortization 5.4 6.7 24.1 14.4 19.8 37.5
Gain on sale
of assets (0.5) (0.3) NM (1.4) (0.3) NM
Landing fees
and other
rentals 7.0 7.9 12.9 18.9 22.1 16.9
Other 8.2 8.7 6.1 25.4 27.3 7.5
-------- ------- -------- --------
Total
Operating
Expenses 118.0 110.6 (6.3) 328.0 342.3 4.4
-------- ------- -------- --------
Operating
Income
(Loss) 3.9 (3.1) 8.0 (18.9)
-------- ------- -------- --------
Interest
expense (0.8) (0.7) (2.5) (2.8)
Interest
capitalized 0.8 0.6 2.5 2.7
U.S. government
compensation -- 10.4 -- 10.4
Other -- net -- -- 0.1 (0.5)
-------- ------- -------- --------
0.0 10.3 0.1 9.8
-------- ------- -------- --------
Income (Loss)
Before
Income Tax $ 3.9 $ 7.2 $ 8.1 $ (9.1)
======== ======= ======== ========
Operating Statistics:
Revenue
passengers
(000) 1,356 1,207 (10.9) 3,813 3,635 (4.7)
RPMs
(000,000) 390 357 (8.6) 1,072 1,050 (2.1)
ASMs
(000,000) 606 555 (8.5) 1,734 1,674 (3.5)
Passenger
load factor 64.4% 64.3% (0.1) pts 61.8% 62.7% 0.9 pts
Breakeven
load factor 62.4% 66.7% 4.3 pts 60.5% 67.2% 6.7 pts
Yield per
passenger
mile 30.07(cent) 27.59(cent) (8.2) 30.11(cent) 28.66(cent) (4.8)
Operating
revenue
per ASM 20.10(cent) 19.36(cent) (3.7) 19.38(cent) 19.32(cent) (0.3)
Operating
expenses
per ASM 19.47(cent) 19.92(cent) 2.3 18.91(cent) 20.45(cent) 8.1
Expense per
ASM
excluding
fuel 16.44(cent) 17.44(cent) 6.1 16.03(cent) 17.75(cent) 10.7
Fuel cost
per
gallon 105.6(cent) 94.0(cent) (11.0) 100.4(cent) 97.6(cent) (2.8)
Fuel
gallons
(000,000) 17.4 14.7 (15.5) 49.8 46.4 (6.8)
Average
number of
employees 3,921 3,811 (2.8) 3,724 3,840 3.1
Aircraft
utilization
(block hours) 8.7 7.6 (12.6) 8.3 7.9 (4.8)
Operating
fleet at
period-end 62 65 4.8 62 65 4.8
--30--brm/se*
| CONTACT: | Alaska Air Group |
|---|---|
| Brad Tilden, 206/433-3362 | |
| or | |
| Lou Cancelmi, 206/433-3170 | |
