Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
Pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
October 21, 2003
(Date of Report)
ALASKA AIR GROUP, INC.
(Exact name of registrant as specified in its charter)
Commission file number 1-8957
| Delaware | 91-1292054 | |
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
19300 Pacific Highway South, Seattle, Washington 98188
(Address of principal executive offices)
(206) 392-5040
(Registrant’s telephone number)
1
| ITEM 7. Financial Statements and Exhibits. | ||||||||
| ITEM 9. Regulation FD Disclosure (Including Item 12 Information). | ||||||||
| Signature | ||||||||
| EXHIBIT 99.1 | ||||||||
Table of Contents
FORWARD-LOOKING INFORMATION
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. These statements relate to future events or our future financial performance and involve known and unknown risks and uncertainties that may cause our actual results or performance to be materially different from those indicated by any forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “forecast,” “may,” “will,” “could,” “should,” “expect,” “plan,” “believe,” “potential” or other similar words indicating future events or contingencies. Some of the things that could cause our actual results to differ from our expectations are: economic conditions; the continued impact of terrorist attacks, global instability and potential U.S. military involvement; our significant indebtedness; downgrades of our credit ratings; the competitive environment and other trends in our industry; changes in laws and regulations; changes in our operating costs including fuel; changes in our business plans; interest rates and the availability of financing; liability and other claims asserted against us; labor disputes; our ability to attract and retain qualified personnel; and inflation. For a discussion of these and other risk factors, see Item 1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2002. All of the forward-looking statements are qualified in their entirety by reference to the risk factors discussed therein. These risk factors may not be exhaustive. We operate in a continually changing business environment, and new risk factors emerge from time to time. Management cannot predict such new risk factors, nor can it assess the impact, if any, of such new risk factors on our business or events described in any forward-looking statements. We disclaim any obligation to publicly update or revise any forward-looking statements after the date of this report to conform them to actual results.
ITEM 7.
Financial Statements and Exhibits.
(c) Exhibits
| Exhibit 99.1 | Press Release dated October 21, 2003 titled “Alaska Air Group Reports Third Quarter Results” |
ITEM 9.
Regulation FD Disclosure (Including Item 12 Information).
Pursuant to ITEM 12, the Registrant hereby furnishes its Third Quarter 2003 Earnings Release.
2
Table of Contents
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| ALASKA AIR GROUP, INC.
|
||
| Registrant | ||
| Date: October 21, 2003 | ||
| /s/ Glenn S. Johnson
|
||
| Glenn S. Johnson | ||
| Vice President/Finance and Controller | ||
| /s/ Bradley D. Tilden
|
||
| Bradley D. Tilden | ||
| Executive Vice President/Finance and Chief Financial Officer |
3
Exhibit 99.1
| Contact: | Brad Tilden | -or- | Lou Cancelmi | |||
| 206/392-5362 | 206/392-5170 |
| FOR IMMEDIATE RELEASE | October 21, 2003 |
ALASKA AIR GROUP REPORTS THIRD QUARTER RESULTS
SEATTLE — Alaska Air Group, Inc. (NYSE:ALK) today reported third quarter net income of $40.7 million, or $1.52 per share, compared to net income of $12.5 million, or $0.47 per share, in the third quarter of 2002.
“Our results were positively affected by stronger loads at both Alaska and Horizon, continued focus on our cost management efforts, and the government’s temporary waiver of security fees,” said Bill Ayer, chairman and chief executive officer. “We’re encouraged by these numbers, but have considerable work to do to return to profitability on a full-year basis. Our people have shown tremendous dedication and commitment to customers while working together to deal with fundamental changes in our industry.”
For the nine months ending September 30, 2003, net income was $29.6 million, or $1.11 per share, compared to a net loss of $75.5 million, or $2.84 per share, during the same period in 2002. Excluding government compensation received in 2003 and a write-off of goodwill in 2002, the company’s net loss for the first nine months of 2003 was $14.7 million ($0.55 per share) versus a loss of $24.4 million ($0.92 per share) for 2002. The 2003 government assistance amounted to $71.4 million ($44.3 million after tax) under the Emergency Wartime Supplemental Appropriations Act. The 2002 net loss included $51.4 million, or $1.93 per share, related to the write-off of goodwill in connection with the adoption of Statement of Financial Accounting Standards No. 142.
Operationally, Alaska Airlines’ passenger traffic in the third quarter increased 12.3 percent on a capacity increase of 9.3 percent. Alaska’s load factor increased 2.0 percentage points to 72.5 percent compared to the same period in 2002. Alaska’s operating revenue per available seat mile (ASM) increased 4.5 percent, while its operating cost per ASM excluding fuel decreased 3.9 percent. Alaska’s pretax income was $50.1 million, compared to $13.1 million in 2002.
1
Horizon Air’s passenger traffic in the third quarter increased 9.9 percent on a 6.7 percent capacity increase. Horizon’s load factor increased by 1.9 percentage points to 66.5 percent compared to the same period in 2002. Horizon’s operating revenue per ASM increased 6.7 percent, while its operating cost per ASM excluding fuel decreased 5.1 percent. Horizon’s pretax income was $19.5 million, compared to $5.9 million in 2002.
Alaska Air Group had cash and short-term investments at September 30, 2003 of approximately $749 million compared to $636 million at December 31, 2002. The increased balance reflects the receipt of $71.4 million of government compensation and $123.2 million net proceeds received in connection with the completion of a private placement of floating rate convertible bonds on March 21, 2003. The company’s debt-to-capital ratio, assuming aircraft operating leases are capitalized at seven times annualized rent, was 78 percent at September 30, 2003 compared to 77 percent as of December 31, 2002.
A summary of financial and statistical data for Alaska Airlines and Horizon as well as a reconciliation of the reported non-GAAP financial measures can be found on pages 5-7.
A conference call regarding the first quarter results will be simulcast via the Internet at 8:30 a.m. Pacific Daylight Time. It may be accessed through our website 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, 2002.
Alaska Air Group is the parent company of Alaska Airlines, Inc. and Horizon Air Industries, Inc.
# # #
2
ALASKA AIR GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(In Millions Except Per Share Amounts)
| Three Months | Nine Months | ||||||||||||||||
| Ended September 30 | Ended September 30 | ||||||||||||||||
| 2002 | 2003 | 2002 | 2003 | ||||||||||||||
Operating Revenues: |
|||||||||||||||||
Passenger |
$ | 570.7 | $ | 645.8 | $ | 1,552.0 | $ | 1,678.2 | |||||||||
Freight and mail |
21.1 | 22.6 | 59.4 | 63.6 | |||||||||||||
Other — net |
28.8 | 33.8 | 85.0 | 89.7 | |||||||||||||
Total Operating Revenues |
620.6 | 702.2 | 1,696.4 | 1,831.5 | |||||||||||||
Operating Expenses: |
|||||||||||||||||
Wages and benefits |
224.1 | 237.9 | 638.8 | 697.5 | |||||||||||||
Contracted services |
22.2 | 24.4 | 69.3 | 74.5 | |||||||||||||
Aircraft fuel |
82.7 | 94.7 | 222.6 | 265.0 | |||||||||||||
Aircraft maintenance |
35.8 | 42.4 | 121.3 | 140.2 | |||||||||||||
Aircraft rent |
48.3 | 49.2 | 141.6 | 146.1 | |||||||||||||
Food and beverage service |
18.6 | 17.6 | 49.9 | 46.6 | |||||||||||||
Commissions |
7.2 | 4.6 | 31.1 | 11.4 | |||||||||||||
Other selling expenses |
32.5 | 31.5 | 96.2 | 87.7 | |||||||||||||
Depreciation and amortization |
34.4 | 32.7 | 100.7 | 98.2 | |||||||||||||
Loss (gain) on sale of assets |
(0.3 | ) | 0.1 | (0.8 | ) | 0.2 | |||||||||||
Landing fees and other rentals |
38.1 | 43.3 | 103.9 | 120.6 | |||||||||||||
Other |
51.5 | 45.0 | 150.9 | 139.3 | |||||||||||||
Total Operating Expenses |
595.1 | 623.4 | 1,725.5 | 1,827.3 | |||||||||||||
Operating (Loss) Income |
25.5 | 78.8 | (29.1 | ) | 4.2 | ||||||||||||
Nonoperating Income (Expense): |
|||||||||||||||||
Interest income |
6.0 | 5.5 | 16.1 | 11.5 | |||||||||||||
Interest expense |
(11.2 | ) | (13.3 | ) | (34.7 | ) | (38.6 | ) | |||||||||
Interest capitalized |
0.6 | 0.4 | 1.4 | 1.9 | |||||||||||||
U.S. government compensation |
0.4 | — | 0.5 | 71.4 | |||||||||||||
Other — net |
(2.0 | ) | (3.2 | ) | 8.9 | 2.7 | |||||||||||
| (6.2 | ) | (10.6 | ) | (7.8 | ) | 48.9 | |||||||||||
Income (loss) before income tax and accounting change |
19.3 | 68.2 | (36.9 | ) | 53.1 | ||||||||||||
Income tax expense (benefit) |
6.8 | 27.5 | (12.8 | ) | 23.5 | ||||||||||||
Income (loss) before accounting change |
12.5 | 40.7 | (24.1 | ) | 29.6 | ||||||||||||
Cumulative effect of accounting change |
— | — | (51.4 | ) | — | ||||||||||||
Net Income (Loss) |
$ | 12.5 | $ | 40.7 | $ | (75.5 | ) | $ | 29.6 | ||||||||
Basic Earnings (Loss) Per Share: |
|||||||||||||||||
Earnings (loss) before accounting change |
$ | 0.47 | $ | 1.53 | $ | (0.91 | ) | $ | 1.11 | ||||||||
Cumulative effect of accounting change |
— | — | (1.93 | ) | — | ||||||||||||
Earnings (Loss) Per Share |
$ | 0.47 | $ | 1.53 | $ | (2.84 | ) | $ | 1.11 | ||||||||
Diluted Earnings (Loss) Per Share: |
|||||||||||||||||
Earnings (loss) before accounting change |
$ | 0.47 | $ | 1.52 | $ | (0.91 | ) | $ | 1.11 | ||||||||
Cumulative effect of accounting change |
— | — | (1.93 | ) | — | ||||||||||||
Earnings (Loss) Per Share |
$ | 0.47 | $ | 1.52 | $ | (2.84 | ) | $ | 1.11 | ||||||||
Shares used for computation: |
|||||||||||||||||
Basic |
26.549 | 26.660 | 26.543 | 26.621 | |||||||||||||
Diluted |
26.562 | 26.796 | 26.543 | 26.680 | |||||||||||||
3
Alaska Air Group, Inc.
CONDENSED CONSOLIDATED BALANCE SHEET (unaudited)
| December 31 | September 30 | |||||||
| (In Millions) | 2002 | 2003 | ||||||
Cash and marketable securities |
$ | 636 | $ | 749 | ||||
Total current assets |
976 | 1,123 | ||||||
Property
and equipment—net |
1,780 | 1,951 | ||||||
Other assets |
125 | 165 | ||||||
Total assets |
$ | 2,881 | $ | 3,239 | ||||
Current liabilities |
778 | 861 | ||||||
Long-term debt and capital lease obligations |
857 | 1,041 | ||||||
Other liabilities and credits |
590 | 654 | ||||||
Shareholders’ equity |
656 | 683 | ||||||
Total liabilities and shareholders’ equity |
$ | 2,881 | $ | 3,239 | ||||
4
Alaska Airlines Financial and Statistical Data
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||||||||
| % | % | |||||||||||||||||||||||
| Financial Data (in millions): | 2002 | 2003 | Change | 2002 | 2003 | Change | ||||||||||||||||||
Operating Revenues: |
||||||||||||||||||||||||
Passenger |
$ | 468.0 | $ | 532.5 | 13.8 | % | $ | 1,275.5 | $ | 1,380.1 | 8.2 | % | ||||||||||||
Freight and mail |
19.7 | 21.4 | 8.6 | % | 55.6 | 59.8 | 7.6 | % | ||||||||||||||||
Other — net |
24.7 | 31.4 | 27.1 | % | 72.2 | 83.0 | 15.0 | % | ||||||||||||||||
Total Operating Revenues |
512.4 | 585.3 | 14.2 | % | 1,403.3 | 1,522.9 | 8.5 | % | ||||||||||||||||
Operating Expenses: |
||||||||||||||||||||||||
Wages and benefits |
184.9 | 198.7 | 7.5 | % | 524.1 | 578.7 | 10.4 | % | ||||||||||||||||
Contracted services |
18.9 | 20.5 | 8.5 | % | 59.8 | 60.9 | 1.8 | % | ||||||||||||||||
Aircraft fuel |
70.7 | 81.6 | 15.4 | % | 190.1 | 227.6 | 19.7 | % | ||||||||||||||||
Aircraft maintenance |
31.6 | 35.2 | 11.4 | % | 103.3 | 117.7 | 13.9 | % | ||||||||||||||||
Aircraft rent |
32.1 | 31.1 | -3.1 | % | 95.7 | 92.8 | -3.0 | % | ||||||||||||||||
Food and beverage service |
17.8 | 17.0 | -4.5 | % | 47.9 | 44.8 | -6.5 | % | ||||||||||||||||
Commissions |
13.2 | 17.6 | 33.3 | % | 43.9 | 38.0 | -13.4 | % | ||||||||||||||||
Other selling expenses |
26.1 | 25.8 | -1.1 | % | 78.8 | 71.0 | -9.9 | % | ||||||||||||||||
Depreciation and amortization |
29.2 | 29.7 | 1.7 | % | 85.7 | 87.8 | 2.5 | % | ||||||||||||||||
Loss on sale of assets |
0.5 | 0.8 | NM | 0.7 | 1.3 | NM | ||||||||||||||||||
Landing fees and other rentals |
30.1 | 33.6 | 11.6 | % | 82.2 | 93.5 | 13.7 | % | ||||||||||||||||
Other |
38.5 | 34.5 | -10.4 | % | 111.3 | 102.9 | -7.5 | % | ||||||||||||||||
Total Operating Expenses |
493.6 | 526.1 | 6.6 | % | 1,423.5 | 1,517.0 | 6.6 | % | ||||||||||||||||
Operating Income (Loss) |
18.8 | 59.2 | NM | (20.2 | ) | 5.9 | NM | |||||||||||||||||
Interest income |
6.4 | 4.6 | 17.5 | 10.3 | ||||||||||||||||||||
Interest expense |
(11.3 | ) | (11.2 | ) | (35.0 | ) | (33.9 | ) | ||||||||||||||||
Interest capitalized |
0.5 | 0.2 | 1.0 | 1.3 | ||||||||||||||||||||
U.S. government compensation |
0.2 | — | 0.3 | 52.8 | ||||||||||||||||||||
Other — net |
(1.5 | ) | (2.7 | ) | 7.7 | 2.7 | ||||||||||||||||||
| (5.7 | ) | (9.1 | ) | (8.5 | ) | 33.2 | ||||||||||||||||||
Income (Loss) Before Income Tax
and Accounting Change |
$ | 13.1 | $ | 50.1 | NM | $ | (28.7 | ) | $ | 39.1 | NM | |||||||||||||
Operating Statistics: |
||||||||||||||||||||||||
Revenue passengers (000) |
3,978 | 4,280 | 7.6 | % | 10,787 | 11,335 | 5.1 | % | ||||||||||||||||
RPMs (000,000) |
3,673 | 4,126 | 12.3 | % | 10,022 | 10,946 | 9.2 | % | ||||||||||||||||
ASMs (000,000) |
5,207 | 5,693 | 9.3 | % | 14,602 | 15,611 | 6.9 | % | ||||||||||||||||
Passenger load factor |
70.5 | % | 72.5 | % | 2.0 | pts | 68.6 | % | 70.1 | % | 1.5 | pts | ||||||||||||
Breakeven load factor |
69.4 | % | 65.9 | % | -3.5 | pts | 71.4 | % | 71.6 | % | 0.2 | pts | ||||||||||||
Yield per passenger mile |
12.74 | ¢ | 12.91 | ¢ | 1.3 | % | 12.73 | ¢ | 12.61 | ¢ | -0.9 | % | ||||||||||||
Operating revenue per ASM |
9.84 | ¢ | 10.28 | ¢ | 4.5 | % | 9.61 | ¢ | 9.76 | ¢ | 1.5 | % | ||||||||||||
Operating expenses per ASM (a) |
9.48 | ¢ | 9.24 | ¢ | -2.5 | % | 9.75 | ¢ | 9.72 | ¢ | -0.3 | % | ||||||||||||
Operating expenses per ASM excluding fuel (a) |
8.12 | ¢ | 7.81 | ¢ | -3.9 | % | 8.45 | ¢ | 8.26 | ¢ | -2.2 | % | ||||||||||||
Fuel cost per gallon |
81.6 | ¢ | 88.7 | ¢ | 8.7 | % | 77.9 | ¢ | 89.6 | ¢ | 15.0 | % | ||||||||||||
Fuel gallons (000,000) |
86.6 | 92.0 | 6.2 | % | 243.9 | 253.9 | 4.1 | % | ||||||||||||||||
Average number of employees |
10,465 | 10,114 | -3.4 | % | 10,167 | 10,079 | -0.9 | % | ||||||||||||||||
Aircraft utilization (blk hrs/day) |
11.2 | 11.1 | -0.9 | % | 10.7 | 10.6 | -0.9 | % | ||||||||||||||||
Operating fleet at period-end |
102 | 109 | 6.9 | % | 102 | 109 | 6.9 | % | ||||||||||||||||
NM = Not Meaningful
(a) See Note 1 on Page 7
Note:
Certain reclassifications have been made to the September 30, 2002 statements of operations to conform
to the September 30, 2003 presentation.
5
Horizon Air Financial and Statistical Data
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||||||||
| % | % | |||||||||||||||||||||||
| Financial Data (in millions): | 2002 | 2003 | Change | 2002 | 2003 | Change | ||||||||||||||||||
Operating Revenues: |
||||||||||||||||||||||||
Passenger |
$ | 110.0 | $ | 127.2 | 15.6 | % | $ | 294.9 | $ | 326.8 | 10.8 | % | ||||||||||||
Freight and mail |
1.4 | 1.2 | -14.3 | % | 3.8 | 3.8 | 0.0 | % | ||||||||||||||||
Other — net |
5.2 | 4.3 | -17.3 | % | 16.4 | 11.7 | -28.7 | % | ||||||||||||||||
Total Operating Revenues |
116.6 | 132.7 | 13.8 | % | 315.1 | 342.3 | 8.6 | % | ||||||||||||||||
Operating Expenses: |
||||||||||||||||||||||||
Wages and benefits |
38.7 | 39.2 | 1.3 | % | 113.2 | 118.8 | 4.9 | % | ||||||||||||||||
Contracted services |
5.3 | 5.7 | 7.5 | % | 15.6 | 18.4 | 17.9 | % | ||||||||||||||||
Aircraft fuel |
12.0 | 13.1 | 9.2 | % | 32.5 | 37.4 | 15.1 | % | ||||||||||||||||
Aircraft maintenance |
4.2 | 7.2 | 71.4 | % | 18.0 | 22.5 | 25.0 | % | ||||||||||||||||
Aircraft rent |
16.2 | 18.1 | 11.7 | % | 45.9 | 53.3 | 16.1 | % | ||||||||||||||||
Food and beverage service |
0.8 | 0.6 | -25.0 | % | 2.0 | 1.8 | -10.0 | % | ||||||||||||||||
Commissions |
1.3 | 0.9 | -30.8 | % | 5.7 | 2.1 | -63.2 | % | ||||||||||||||||
Other selling expenses |
6.4 | 5.7 | -10.9 | % | 17.4 | 16.7 | -4.0 | % | ||||||||||||||||
Depreciation and amortization |
4.9 | 2.7 | -44.9 | % | 13.9 | 9.5 | -31.7 | % | ||||||||||||||||
Gain on sale of assets |
(0.7 | ) | (0.7 | ) | NM | (1.4 | ) | (1.1 | ) | NM | ||||||||||||||
Landing fees and other rentals |
8.6 | 10.3 | 19.8 | % | 22.8 | 28.2 | 23.7 | % | ||||||||||||||||
Other |
12.5 | 9.7 | -22.4 | % | 37.5 | 32.6 | -13.1 | % | ||||||||||||||||
Total Operating Expenses |
110.2 | 112.5 | 2.1 | % | 323.1 | 340.2 | 5.3 | % | ||||||||||||||||
Operating
Income (Loss) |
6.4 | 20.2 | 215.6 | % | (8.0 | ) | 2.1 | -126.3 | % | |||||||||||||||
Interest income |
0.2 | 0.2 | 0.6 | 0.5 | ||||||||||||||||||||
Interest expense |
(0.6 | ) | (0.6 | ) | (1.6 | ) | (1.9 | ) | ||||||||||||||||
Interest capitalized |
0.1 | 0.2 | 0.4 | 0.6 | ||||||||||||||||||||
Government compensation |
0.2 | — | 0.2 | 18.6 | ||||||||||||||||||||
Other — net |
(0.4 | ) | (0.5 | ) | 1.3 | — | ||||||||||||||||||
| (0.5 | ) | (0.7 | ) | 0.9 | 17.8 | |||||||||||||||||||
Income (Loss) Before Income Tax
and Accounting Change |
$ | 5.9 | $ | 19.5 | NM | $ | (7.1 | ) | $ | 19.9 | NM | |||||||||||||
Operating Statistics: |
||||||||||||||||||||||||
Revenue passengers (000) |
1,334 | 1,376 | 3.1 | % | 3,621 | 3,671 | 1.4 | % | ||||||||||||||||
RPMs (000,000) |
424 | 466 | 9.9 | % | 1,128 | 1,224 | 8.5 | % | ||||||||||||||||
ASMs (000,000) |
657 | 701 | 6.7 | % | 1,795 | 1,950 | 8.6 | % | ||||||||||||||||
Passenger load factor |
64.6 | % | 66.5 | % | 1.9 | pts | 62.8 | % | 62.8 | % | 0.0 | pts | ||||||||||||
Breakeven load factor |
61.6 | % | 56.2 | % | -5.4 | pts | 65.0 | % | 62.8 | % | -2.2 | pts | ||||||||||||
Yield per passenger mile |
25.92 | ¢ | 27.29 | ¢ | 5.3 | % | 26.15 | ¢ | 26.70 | ¢ | 2.1 | % | ||||||||||||
Operating revenue per ASM |
17.74 | ¢ | 18.93 | ¢ | 6.7 | % | 17.55 | ¢ | 17.56 | ¢ | 0.1 | % | ||||||||||||
Operating expenses per ASM |
16.76 | ¢ | 16.05 | ¢ | -4.3 | % | 17.99 | ¢ | 17.45 | ¢ | -3.0 | % | ||||||||||||
Operating expenses per ASM excluding fuel (a) |
14.94 | ¢ | 14.18 | ¢ | -5.1 | % | 16.18 | ¢ | 15.53 | ¢ | -4.0 | % | ||||||||||||
Fuel cost per gallon |
81.9 | ¢ | 90.3 | ¢ | 10.3 | % | 80.1 | ¢ | 91.9 | ¢ | 14.7 | % | ||||||||||||
Fuel gallons (000,000) |
14.7 | 14.5 | -1.4 | % | 40.6 | 40.7 | 0.2 | % | ||||||||||||||||
Average number of employees |
3,518 | 3,368 | -4.3 | % | 3,463 | 3,375 | -2.5 | % | ||||||||||||||||
Aircraft utilization (blk hrs/day) |
7.7 | 8.2 | 6.5 | % | 7.4 | 7.9 | 6.8 | % | ||||||||||||||||
Operating fleet at period-end |
63 | 61 | -3.2 | % | 63 | 61 | -3.2 | % | ||||||||||||||||
NM = Not Meaningful
(a) See Note 1 on Page 7
Note:
Certain reclassifications have been made to the September 30, 2002 statements of operations to conform
to the September 30, 2003 presentation.
6
Note 1:
Pursuant to new guidelines issued by the Securities and Exchange Commission, we are providing the following reconciliation of non-GAAP performance indicators to their comparable financial measures reported on a GAAP basis. Our disclosure of operating costs and cost per available seat mile, excluding fuel, provides us the ability to measure and monitor our performance both with and without the cost of aircraft fuel as both the cost and availability of fuel are subject to economic and political factors beyond our control. We also believe that disclosing net income (loss) and diluted earnings (loss) per share excluding non-recurring items is helpful to investors in evaluating our operational performance because we believe the reimbursements received from the government and the write-off of goodwill are non-recurring events. The following table reconciles operating expenses excluding fuel and operating expense per ASM excluding fuel for Alaska Airlines, Inc. and Horizon Air Industries, Inc.:
| Alaska Airlines, Inc.: | |||||||||||||||||
| ($ in millions) | Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||
| 2002 | 2003 | 2002 | 2003 | ||||||||||||||
Operating expenses |
$ | 493.6 | $ | 526.1 | $ | 1,423.5 | $ | 1,517.0 | |||||||||
ASMs (000,000) |
5,207 | 5,693 | 14,602 | 15,611 | |||||||||||||
Operating expenses per ASM |
9.48 | ¢ | 9.24 | ¢ | 9.75 | ¢ | 9.72 | ¢ | |||||||||
Operating expenses |
$ | 493.6 | $ | 526.1 | $ | 1,423.5 | $ | 1,517.0 | |||||||||
Less: aircraft fuel |
70.7 | 81.6 | 190.1 | 227.6 | |||||||||||||
Operating expense excluding fuel |
$ | 422.9 | $ | 444.5 | $ | 1,233.4 | $ | 1,289.4 | |||||||||
ASMs (000,000) |
5,207 | 5,693 | 14,602 | 15,611 | |||||||||||||
Operating expense per ASM excluding fuel |
8.12 | ¢ | 7.81 | ¢ | 8.45 | ¢ | 8.26 | ¢ | |||||||||
| Horizon Air Industries, Inc.: | |||||||||||||||||
| ($ in millions) | |||||||||||||||||
| 2002 | 2003 | 2002 | 2003 | ||||||||||||||
Operating expenses |
$ | 110.2 | $ | 112.5 | $ | 323.1 | $ | 340.2 | |||||||||
ASMs (000,000) |
657 | 701 | 1,795 | 1,950 | |||||||||||||
Operating expenses per ASM |
16.76 | ¢ | 16.05 | ¢ | 17.99 | ¢ | 17.45 | ¢ | |||||||||
Operating expenses |
$ | 110.2 | $ | 112.5 | $ | 323.1 | $ | 340.2 | |||||||||
Less: aircraft fuel |
12.0 | 13.1 | 32.5 | 37.4 | |||||||||||||
Operating expense excluding fuel |
$ | 98.2 | $ | 99.4 | $ | 290.6 | $ | 302.8 | |||||||||
ASMs (000,000) |
657 | 701 | 1,795 | 1,950 | |||||||||||||
Operating expense per ASM excluding fuel |
14.94 | ¢ | 14.18 | ¢ | 16.18 | ¢ | 15.53 | ¢ | |||||||||
The following table summarizes Alaska Air Group, Inc.’s net earnings (loss) and diluted income (loss) per share during 2002 and 2003 excluding certain non-recurring items and as reported in accordance with GAAP (dollars in millions):
| Three Months Ended September 30, | ||||||||||||||||
| 2002 | 2003 | |||||||||||||||
| Dollars | Earnings Per Share | Dollars | Earnings Per Share | |||||||||||||
Net income and diluted EPS excluding
Government compensation |
$ | 12.2 | $ | 0.46 | $ | 40.7 | $ | 1.52 | ||||||||
Government compensation, net of tax |
0.3 | 0.01 | — | — | ||||||||||||
Reported GAAP amounts |
$ | 12.5 | $ | 0.47 | $ | 40.7 | $ | 1.52 | ||||||||
| Nine Months Ended September 30, | ||||||||||||||||
| 2002 | 2003 | |||||||||||||||
| Dollars | Loss Per Share | Dollars | Earnings Per Share | |||||||||||||
Net income (loss) and diluted earnings (loss) per share
excluding non-recurring items |
($24.4 | ) | ($0.92 | ) | ($14.7 | ) | ($0.55 | ) | ||||||||
Change in accounting principle relating to goodwill |
(51.4 | ) | ($1.93 | ) | — | — | ||||||||||
Government compensation, net of tax |
0.3 | 0.01 | 44.3 | 1.66 | ||||||||||||
Reported GAAP amounts |
($75.5 | ) | ($2.84 | ) | $ | 29.6 | $ | 1.11 | ||||||||
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