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Alaska Air Group Reports Year-end and Fourth Quarter Results
SEATTLE--(BUSINESS WIRE)--Jan. 25, 2002--Alaska Air Group, Inc. (NYSE: ALK) today reported a fourth quarter 2001 net loss of $36.4 million, or $1.37 per share, compared with a fourth quarter 2000 net loss of $28.9 million or $1.09 per share.
The 2001 figure includes pre-tax compensation of $52.3 million that was received pursuant to the Air Transportation Safety and System Stabilization Act and a $10.2 million special charge related to the retirement of Horizon's F-28 fleet. Excluding these items, the company lost $62.9 million or $2.37 per share in the fourth quarter of 2001.
For the full year, Alaska Air Group lost $39.5 million, or $1.49 per share in 2001 versus a loss before the cumulative effect of an accounting change of $13.4 million, or $0.51 per share, in 2000. Excluding the effect of the government compensation, the F-28 impairment charge and a Mileage Plan special charge in 2000, the company lost $84.4 million, or $3.19 per share in 2001 versus a profit of $1.4 million, or $0.05 per share in 2000.
"The entire airline industry has been struggling in the wake of September 11, but fortunately we've been much less impacted here on the West Coast," said John F. Kelly, chairman and chief executive officer. "Of course, it's always disappointing to produce negative results, but relative to the industry, we certainly can't complain."
Compared to the industry, traffic at Alaska was down 5.6 percent vs. 19 percent for the industry as a whole; yield per revenue passenger mile was down 7.3 percent vs. 17 percent, and unit revenues were down 5.5 percent vs. 20 percent.
Kelly noted that the company's strategy following September 11 was to not furlough Alaska employees and to keep Horizon staffing reductions to a bare minimum; to build schedules back to 100 percent by February 10; to control variable costs; and to continue to take advantage of new market opportunities. "We're executing the plan as we outlined it, and we're even poised for some strategic growth at both Alaska and Horizon" Kelly said. "We believe that our strategy, coupled with the strength of our markets and a strong balance sheet, positions us well for the future."
For Alaska Airlines the new market opportunities include Los Angeles-Cancun (started December 15); Los Angeles-Calgary (starts February 8); Seattle-Boston (starts April 4); Seattle-Denver (starts April 28) and Vancouver, BC-Orange County (starts April 28).
For Horizon Air, new markets include Portland-Denver and Boise-Denver (starting April 28); Boise-Sacramento (starts February 8); Medford-Los Angeles (started November 28); and Portland-Tucson (starts February 10).
"We're encouraged by the passenger loads we've seen in the past couple of months, as well as the gains we've made in market share," said Kelly. "Plus, we're optimistic that our new routes will help stimulate incremental traffic and boost revenue. On the other hand, we're going to continue to do everything possible to control variable costs."
To date, Alaska Air Group has recorded $81.4 million of federal assistance under the stabilization act. Pending submission and approval of our final application, we expect to record an additional $12.3 million in 2002.
Operationally, Alaska Airlines' passenger traffic in the fourth quarter decreased 5.6 percent on a capacity decrease of 5.9 percent. Load factor increased 0.2 points to 66.4 percent. The airline's operating revenue per available seat mile (ASM) decreased 5.5 percent, while its operating cost per ASM excluding fuel increased 10.8 percent. Alaska's pretax loss was $19.7 million compared to a loss of $39.4 million a year earlier. Alaska's results include $52.9 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. Horizon's passenger traffic for the fourth quarter decreased 15.6 percent on a 16.1 percent capacity decrease. Its load factor increased 0.4 points to 63.3 percent. The airline's operating revenue per ASM decreased 5.6 percent, while its operating cost per ASM excluding fuel and a special charge increased
-
14.8 percent. Horizon's pretax loss excluding a special charge was $22.3 million, compared to a loss of $13.9 million a year earlier. This year's results include the $9.8 million of pre-tax compensation from the government plus manufacturer support for delays in delivery of aircraft.
A conference call regarding year-end and fourth quarter results will be simulcast via the Internet at 11:00 a.m. Pacific Standard Time. It may be accessed by logging on at www.alaskaair.com.
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 Ended Year Ended
December 31 December 31
---------------------- ----------------------
2000 2001 2000 2001
---- ---- ---- ----
Operating Revenues:
Passenger $ 496.5 $ 422.1 $ 2,032.3 $1,973.0
Freight and mail 21.4 19.0 87.6 86.3
Other - net 14.5 21.1 57.3 81.6
------- -------- ---------- ---------
Total Operating
Revenues 532.4 462.2 2,177.2 2,140.9
------- -------- ---------- ---------
Operating Expenses:
Wages and benefits 183.1 208.2 715.5 799.3
Contracted services 22.7 21.0 77.6 82.0
Aircraft fuel 109.6 59.2 383.3 324.3
Aircraft maintenance 54.7 36.0 192.3 174.0
Aircraft rent 47.7 47.4 186.8 185.9
Food and beverage
service 13.8 13.7 54.2 58.3
Commissions 15.6 12.4 67.1 60.2
Other selling expenses 33.1 28.5 121.2 124.9
Depreciation and
amortization 30.2 36.5 105.5 131.7
Loss on sale of assets 0.6 3.2 - 4.7
Landing fees and
other rentals 26.5 36.9 99.8 129.7
Other 49.1 45.4 170.5 177.5
Special charges - 10.2 24.0 10.2
---------- -------- ---------- ---------
Total Operating
Expenses 586.7 558.6 2,197.8 2,262.7
------- -------- ---------- ---------
Operating Loss (54.3) (96.4) (20.6) (121.8)
-------- --------- ----------- ----------
Interest income 7.9 4.9 24.3 25.8
Interest expense (10.9) (12.8) (36.0) (47.4)
Interest capitalized 4.2 0.6 15.5 8.1
U.S. government
compensation - 52.3 - 81.4
Other - net (0.6) (1.3) 1.1 (3.6)
0.6 43.7 4.9 64.3
------- -------- ---------- ---------
Loss Before Income
Tax and Accounting
Change (53.7) (52.7) (15.7) (57.5)
Income tax credit (24.8) (16.3) (2.3) (18.0)
-------- --------- ----------- ----------
Loss Before Acct'g
Change (28.9) (36.4) (13.4) (39.5)
Cumulative effect of
Accounting Change
Net of Income Tax - - (56.9) -
---------- ---------- ----------- ------------
Net Loss $ (28.9) $ (36.4) $ (70.3) $ (39.5)
======== ========= =========== ==========
Basic Loss Per Share:
Income before
accounting change $(1.09) $(1.37) $(0.51) $(1.49)
Cumulative effect
of acct'g change - - (2.15) -
--------- -------- --------- ----------
Net Loss $(1.09) $(1.37) $(2.66) $(1.49)
======= ======= ======= =======
Diluted Loss Per
Share:
Income before
accounting change $(1.09) $(1.37) $(0.51) $(1.49)
Cumulative effect of
acct'g change - - (2.15) -
--------- -------- --------- ----------
Net Loss $(1.09) $(1.37) $(2.66) $(1.49)
======= ======= ======= =======
Shares used for
computation:
Basic 26.448 26.528 26.440 26.499
Diluted 26.448 26.528 26.440 26.499
ALASKA AIR GROUP, INC.
CONSOLIDATED BALANCE SHEET December 31 December 31
-------------------------- 2000 2001
(In millions)
------------- ------------
Cash and marketable securities $ 462 $ 661
===== =====
Total current assets 702 900
Property and equipment-net 1,730 1,825
Other assets 168 209
-------- --------
Total assets $2,600 $2,934
====== ======
Current liabilities $ 711 $ 756
Long-term debt and capital
lease obligations 609 863
Other liabilities and credits 418 495
Shareholders' equity 862 820
------- -------
Total liabilities and equity $2,600 $2,934
====== ======
Note: Certain reclassifications have been made to the December 31,
2000 balance sheet to conform to the December 31, 2001 presentation.
SUPPLEMENTAL TABLE
During 2001 and 2000, the Company's diluted earnings per share (EPS)
and net income (loss) were impacted by the following (dollars in
millions):
Three Months Ended December 31
2000 2001
---------------- ------------------
Dollars EPS Dollars EPS
------- --- ------- ---
Net loss and diluted EPS
excluding
non-recurring items $ (28.9) $ (1.09) $ (62.9) $ (2.37)
U.S. government compensation 32.9 1.24
Special charge - impairment of
Horizon F-28 fleet (6.4) (0.24)
------- --- ------- ---
Reported amounts $ (28.9) $ (1.09) $ (36.4) $ (1.37)
======= ========= ======== ========
Year Ended December 31
2000 2001
---------------- ------------------
Dollars EPS Dollars EPS
------- --- ------- ---
Net income (loss) and diluted
EPS excluding non-recurring
items $ 1.4 $ 0.05 $ (84.4) $ (3.19)
U.S. government compensation 51.3 1.94
Special charge - impairment of
Horizon F-28 fleet (6.4) (0.24)
Special charge - Mileage Plan (14.8) (0.56)
Change in accounting principle
for sale of Mileage Plan
miles (56.9) (2.15)
------- --- ------- ---
Reported amounts $(70.3) $ (2.66) $(39.5) $ (1.49)
======= ========= ======== ========
Alaska Airlines Financial and Statistical Data
Quarter Ended December 31
-------------------------------------
%
Financial Data (in millions): 2000 2001 Change
---- ---- ------
Operating Revenues:
Passenger $ 396.3 $ 346.7 (12.5)
Freight and mail 18.7 17.7 (5.3)
Other - net 14.0 17.1 22.1
-------- ---------
Total Operating Revenues 429.0 381.5 (11.1)
-------- ---------
Operating Expenses:
Wages and benefits 145.5 167.3 15.0
Contracted services 19.7 18.3 (7.1)
Aircraft fuel 89.5 50.0 (44.1)
Aircraft maintenance 38.0 29.7 (21.8)
Aircraft rent 37.0 33.6 (9.2)
Food and beverage service 13.0 13.1 0.8
Commissions 15.7 13.7 (12.7)
Other selling expenses 27.7 23.8 (14.1)
Depreciation and amortization 23.7 29.2 23.2
Loss on sale of assets 0.5 3.2 NM
Landing fees and other rentals 20.0 28.8 44.0
Other 38.8 35.1 (9.5)
Special charge - Mileage Plan - -
----------- ------------
Total Operating Expenses 469.1 445.8 (5.0)
-------- ---------
Operating Loss (40.1) (64.3) 60.3
--------- ----------
Interest income 8.6 5.4
Interest expense (10.9) (12.8)
Interest capitalized 3.6 0.3
U.S. government compensation - 52.9
Other - net (0.6) (1.2)
--------- ----------
0.7 44.6
-------- ---------
Loss Before Income Tax
and Accounting Change $ (39.4) $ (19.7) (50.0)
========= ==========
Operating Statistics:
Revenue passengers (000) 3,270 3,025 (7.5)
RPMs (000,000) 2,899 2,736 (5.6)
ASMs (000,000) 4,379 4,121 (5.9)
Passenger load factor 66.2% 66.4% 0.2 pts
Breakeven load factor 75.0% 82.4% 7.4 pts
Yield per passenger mile 13.67(cent) 12.67(cent) (7.3)
Operating revenue per ASM 9.80(cent) 9.26(cent) (5.5)
Operating expenses per ASM(a) 10.71(cent) 10.82(cent) 1.0
Operating expense per ASM
ex fuel(a) 8.67(cent) 9.60(cent) 10.8
Fuel cost per gallon 118.1(cent) 71.9(cent) (39.2)
Fuel gallons (000,000) 75.7 69.6 (8.1)
Average number of employees 9,963 9,834 (1.3)
Aircraft utilization
(blk hrs/day) 10.6 9.2 (13.2)
Operating fleet at period-end 95 101 6.3
(a) Year-to-date excludes the impact of a special charge in June 2000.
Year Ended December 31
--------------------------
%
Financial Data (in millions): 2000 2001 Change
---- ---- ------
Operating Revenues:
Passenger $ 1,617.9 $ 1,608.3 (0.6)
Freight and mail 76.4 78.2 2.4
Other - net 54.7 64.4 17.7
--------- ---------
Total Operating Revenues 1,749.0 1,750.9 0.1
--------- ---------
Operating Expenses:
Wages and benefits 576.7 646.7 12.1
Contracted services 66.1 71.2 7.7
Aircraft fuel 313.1 269.8 (13.8)
Aircraft maintenance 128.8 125.1 (2.9)
Aircraft rent 144.3 137.6 (4.6)
Food and beverage service 51.0 55.5 8.8
Commissions 65.1 64.1 (1.5)
Other selling expenses 98.5 102.7 4.3
Depreciation and amortization 83.9 103.6 23.5
Loss on sale of assets 1.3 5.0 NM
Landing fees and other rentals 74.4 99.5 33.7
Other 135.4 139.9 3.3
Special charge - Mileage Plan 24.0 -
----------- -----------
Total Operating Expenses 1,762.6 1,820.7 3.3
--------- ---------
Operating Loss (13.6) (69.8) 413.2
---------- ----------
Interest income 27.9 29.6
Interest expense (36.0) (47.4)
Interest capitalized 12.4 5.1
U.S. government compensation - 71.6
Other - net 1.1 (2.9)
--------- ----------
5.4 56.0
--------- ---------
Loss Before Income Tax
and Accounting Change $ (8.2) $ (13.8) 68.3
========== ==========
Operating Statistics:
Revenue passengers (000) 13,525 13,668 1.1
RPMs (000,000) 11,986 12,249 2.2
ASMs (000,000) 17,315 17,919 3.5
Passenger load factor 69.2% 68.4% (0.8) pts
Breakeven load factor 69.7% 73.5% 3.8 pts
Yield per passenger mile 13.50(cent) 13.13(cent) (2.7)
Operating revenue per ASM 10.10(cent) 9.77(cent) (3.3)
Operating expenses per ASM(a) 10.04(cent) 10.16(cent) 1.2
Operating expense per ASM
ex fuel(a) 8.23(cent) 8.65(cent) 5.1
Fuel cost per gallon 103.4(cent) 88.3(cent) (14.6)
Fuel gallons (000,000) 302.9 305.7 0.9
Average number of employees 9,611 10,115 5.2
Aircraft utilization
(blk hrs/day) 10.7 10.4 (2.8)
Operating fleet at period-end 95 101 6.3
(a) Year-to-date excludes the impact of a special charge in June 2000.
Horizon Air Financial and Statistical Data
Quarter Ended December 31
-------------------------------------
%
Financial Data (in millions): 2000 2001 Change
-------------------------------------
Operating Revenues:
Passenger $103.3 $79.0 (23.5)
Freight and mail 2.8 1.3 (53.6)
Other - net 1.4 4.7 235.7
-------------------------------------
Total Operating Revenues 107.5 85.0 (20.9)
-------------------------------------
Operating Expenses:
Wages and benefits 37.7 40.9 8.5
Contracted services 3.8 3.4 (10.5)
Aircraft fuel 20.2 9.3 (54.0)
Aircraft maintenance 16.7 6.4 (61.7)
Aircraft rent 10.6 13.8 30.2
Food and beverage service 0.8 0.6 (25.0)
Commissions 3.1 2.3 (25.8)
Other selling expenses 5.5 4.6 (16.4)
Depreciation and amortization 6.3 6.9 9.5
Gain (loss) on sale of assets 0.1 (0.1) NM
Landing fees and other rentals 6.5 8.1 24.6
Other 10.1 10.4 3.0
Special charge - asset impairment - 10.2
-------------------------------------
Total Operating Expenses 121.4 116.8 (3.8)
Operating Loss (13.9) (31.8) 128.8
-------------------------------------
Interest expense (0.6) (0.3)
Interest capitalized 0.6 0.3
U.S. government compensation - (0.6)
Other - net - (0.1)
-------------------------------------
- (0.7)
-------------------------------------
Loss Before Income Tax $(13.9) $(32.5) 133.8
=====================================
Operating Statistics:
Revenue passengers (000) 1,231 1,034 (16.0)
RPMs (000,000) 356 300 (15.6)
ASMs (000,000) 565 474 (16.1)
Passenger load factor 62.9% 63.3% 0.4 pts
Breakeven load factor 71.9% 82.2% 10.3 pts
Yield per passenger mile 29.06(cent) 26.33(cent) (9.4)
Operating revenue per ASM 19.02(cent) 17.95(cent) (5.6)
Operating expenses per ASM(a) 21.48(cent) 22.51(cent) 4.8
Expense per ASM excluding fuel(a) 17.91(cent) 20.55(cent) 14.8
Fuel cost per gallon 121.4(cent) 77.4(cent) (36.3)
Fuel gallons (000,000) 16.6 12.0 (27.7)
Average number of employees 4,008 3,534 (11.8)
Aircraft utilization
(blk hrs/day) 8.2 6.7 (18.3)
Operating fleet at period-end 62 60 (3.2)
(a) 2001 excludes the impact of a special charge in December 2001.
Year Ended December 31
-------------------------------------
%
Financial Data (in millions): 2000 2001 Change
-------------------------------------
Operating Revenues:
Passenger $426.2 $380.0 (10.8)
Freight and mail 11.2 8.1 (27.7)
Other - net 6.1 20.3 232.8
-------------------------------------
Total Operating Revenues 443.5 408.4 (7.9)
-------------------------------------
Operating Expenses:
Wages and benefits 138.9 152.6 9.9
Contracted services 14.2 13.8 (2.8)
Aircraft fuel 70.2 54.5 (22.4)
Aircraft maintenance 63.5 49.0 (22.8)
Aircraft rent 42.5 48.4 13.9
Food and beverage service 3.2 2.9 (9.4)
Commissions 13.9 11.3 (18.7)
Other selling expenses 22.7 22.2 (2.2)
Depreciation and amortization 20.7 26.7 29.0
Gain (loss) on sale of assets (1.3) (0.4) NM
Landing fees and other rentals 25.4 30.2 18.9
Other 35.5 37.7 6.2
Special charge - asset impairment - 10.2
-------------------------------------
Total Operating Expenses 449.4 459.1 2.2
Operating Loss (5.9) (50.7) 759.3
Interest expense (3.1) (3.1)
Interest capitalized 3.1 3.0
U.S. government compensation - 9.8
Other - net 0.1 (0.6)
-------------------------------------
0.1 9.1
-------------------------------------
Loss Before Income Tax $(5.8) $(41.6) 617.2
=====================================
Operating Statistics:
Revenue passengers (000) 5,044 4,668 (7.5)
RPMs (000,000) 1,428 1,350 (5.5)
ASMs (000,000) 2,299 2,148 (6.6)
Passenger load factor 62.1% 62.9% 0.8 pts
Breakeven load factor 63.2% 70.2% 7.0 pts
Yield per passenger mile 29.85(cent) 28.14(cent) (5.7)
Operating revenue per ASM 19.29(cent) 19.02(cent) (1.4)
Operating expenses per ASM(a) 19.54(cent) 20.90(cent) 7.0
Expense per ASM excluding fuel(a) 16.49(cent) 18.36(cent) 11.4
Fuel cost per gallon 105.7(cent) 93.4(cent) (11.6)
Fuel gallons (000,000) 66.5 58.3 (12.3)
Average number of employees 3,795 3,764 (0.8)
Aircraft utilization
(blk hrs/day) 8.3 7.6 (8.4)
Operating fleet at period-end 62 60 (3.2)
(a) 2001 excludes the impact of a special charge in December 2001.
--30--jc/se* cjg/se
| CONTACT: | Alaska Air Group, Inc. |
|---|---|
| Brad Tilden, 206/433-3362 | |
| or | |
| Alaska Air Group, Inc. | |
| Lou Cancelmi, 206/433-3170 | |
