UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from . . . . . . to . . . . . .
Commission file number 1-8957
ALASKA AIR GROUP, INC.
(Exact name of registrant as specified in its charter)
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)
Registrant's telephone number, including area code: (206) 431-7040
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court. Yes. No.
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
The registrant has 20,314,416 common shares, par value $1.00,
outstanding at March 31, 1998.
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Attached are the following Alaska Air Group, Inc. (the Company or Air
Group) unaudited financial statements: (i) consolidated balance sheets as
of March 31, 1998 and December 31, 1997; (ii) consolidated statements of
income for the three months ended March 31, 1998 and 1997; (iii)
consolidated statement of shareholders' equity for the three months ended
March 31, 1998; and, (iv) consolidated statements of cash flows for the
three months ended March 31, 1998 and 1997. Also attached are the
accompanying notes to the Company's consolidated financial statements that
have changed significantly during the three months ended March 31, 1998.
These statements, which should be read in conjunction with the financial
statements in the Company's annual report on Form 10-K for the year ended
December 31, 1997, include all adjustments that are, in the opinion of
management, necessary for a fair presentation of the results for the
interim periods. The adjustments made were of a normal recurring nature.
Air Group is a holding company incorporated in Delaware in 1985. Its
principal subsidiaries are Alaska Airlines, Inc. (Alaska) and Horizon Air
Industries, Inc. (Horizon).
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Results of Operations
First Quarter 1998 Compared with First Quarter 1997
The consolidated net income for the first quarter of 1998 was $13.1
million, or $0.56 per share (diluted), compared with a net loss of $5.7
million, or $0.39 per share, in 1997. Consolidated operating income for
the first quarter of 1998 was $22.5 million compared to an operating loss
of $5.4 million for 1997. Lower fuel prices, adjusted for profit sharing,
accounted for $18.8 million of the $27.9 million improvement in operating
income. Airline financial and statistical data is shown following the Air
Group financial statements. A discussion of this data follows.
Alaska Airlines Operating income improved to $22.5 million, resulting in a
6.5% operating margin as compared to a negative 0.5% margin in 1997.
Operating revenue per available seat mile (ASM) increased 4.1% to 9.06
cents while operating expenses per ASM decreased 3.1% to 8.47 cents.
The increase in revenue per ASM was due to a 6.4% increase in system
passenger yield partially offset by a 0.7 point decrease in passenger load
factor. Most markets, including the three largest (Seattle - Anchorage,
Pacific Northwest - Southern California and Pacific Northwest - Northern
California), experienced increases in yields and load factors. The higher
yields and load factors reflect a more stabilized competitive environment
in those markets in 1998. Most of the ASM growth was in the Company's
newest market, Vancouver, Canada, where daily round trip flights have
increased from three to nine. Excluding this new market, the passenger
load factor would have shown a slight increase over the prior year.
Freight and mail revenues increased 5.7%, primarily due to higher mail
volumes and rates. Other-net revenues decreased 5.4% due to an increased
deferral of revenue from travel partners in Alaska's frequent flyer
program, and lower maintenance service revenue.
The table below shows the major operating expense elements on a cost per
ASM basis for Alaska for the first quarters of 1997 and 1998.
Alaska Airlines Operating Expenses Per ASM (In Cents)
1997 1998 Change % Change
Wages and benefits 2.77 2.92 .15 5
Employee profit sharing -- .05 .05 NM
Contracted services .28 .32 .04 14
Aircraft fuel 1.50 1.03 (.47) (31)
Aircraft maintenance .41 .48 .07 17
Aircraft rent 1.02 .98 (.04) (4)
Food and beverage service .30 .29 (.01) (3)
Commissions .63 .57 (.06) (10)
Other selling expenses .45 .45 -- --
Depreciation and amortization .38 .40 .02 5
Landing fees and other rentals .36 .35 (.01) (3)
Other .64 .63 (.01) (2)
Alaska Airlines Total 8.74 8.47 (.27) (3)
NM = Not Meaningful
Alaska's lower unit costs were primarily due to lower fuel prices, offset
by higher labor costs. Significant unit cost changes are discussed below.
Employees increased 5.4%, in line with the 6.0% increase in ASMs.
Excluding profit sharing, average wages and benefits per employee were up
5.8%, primarily due to higher pilot wage rates and pension costs. The net
effect was that wages and benefits expense increased more than the ASM
growth, resulting in a 5% increase in cost per ASM.
Fuel expense per ASM decreased 31%, due to a 31% decrease in the price of
fuel.
Maintenance expense per ASM increased 17%, because the 1997 results
included a $1.0 million favorable spare parts adjustment, whereas the 1998
results included $0.9 million more materials usage and $0.8 million more
amortization of engine and airframe overhauls.
Commission expense per ASM decreased 10%, because the commission rate paid
to travel agents decreased from 10% to 8% for sales made October 1, 1997
and thereafter. As a percentage of passenger revenue, commissions
decreased 15%, from 8.2% to 7.0%
Horizon Air Operating income improved to $0.4 million, resulting in a 0.5%
operating margin as compared to a negative 5.2% margin in 1997. Operating
revenue per ASM decreased 7.5% to 19.06 cents, while operating expenses per
ASM decreased 12.5% to 18.96 cents.
The decrease in revenue per ASM was largely due to a 7.9% decrease in yield
per revenue passenger mile (RPM), as the passenger load factor remained
essentially constant at 59.0%. The decrease in yield per RPM is partly due
to providing more nonstop service to existing city pairs with F-28 jets.
The table below shows the major operating expense elements on a cost per
ASM basis for Horizon for the first quarters of 1997 and 1998.
Horizon Air Operating Expenses Per ASM (In Cents)
1997 1998 Change % Change
Wages and benefits 6.76 6.12 (.64) (10)
Employee profit sharing -- .02 .02 NM
Contracted services .45 .43 (.02) (4)
Aircraft fuel 2.62 1.77 (.85) (32)
Aircraft maintenance 3.00 2.66 (.34) (11)
Aircraft rent 2.48 2.51 .03 1
Food and beverage service .13 .11 (.02) (15)
Commissions 1.30 .97 (.33) (25)
Other selling expenses 1.25 1.09 (.16) (13)
Depreciation and amortization .85 .69 (.16) (19)
Loss (gain) on sale of assets (.20) -- .20 NM
Landing fees and other rentals .94 .91 (.03) (3)
Other 2.08 1.68 (.40) (19)
Horizon Air Total 21.66 18.96 (2.70) (12)
NM = Not Meaningful
Horizon's unit costs decreased 12%, primarily due to 30% lower fuel prices,
lower travel agency commission rates and more efficient operations that
have resulted from a simplified fleet.
Consolidated Nonoperating Income (Expense) Nonoperating expense decreased
from $4.7 million to $0.5 million due to $2.0 million more interest income
earned on higher cash balances and less interest expense incurred due to
conversion of the 6-7/8% convertible bonds in February 1998.
Income Tax Expense Accounting standards require the Company to provide for
income taxes each quarter based on its estimate of the effective tax rate
for the full year. The volatility of air fares and the seasonality of the
Company's business make it difficult to accurately forecast full-year
pretax results. In addition, a relatively small change in pretax results
can cause a significant change in the effective tax rate due to the
magnitude of nondeductible expenses, such as goodwill amortization and
employee per diem costs. In estimating the 40.5% tax rate for the first
quarter of 1998, the Company considered a variety of factors, including the
U.S. federal rate of 35%, estimates of nondeductible expenses and state
income taxes, and the 41.4% tax rate used for full year 1997. This rate is
evaluated each quarter and adjustments are made if necessary.
Liquidity and Capital Resources
The table below presents the major indicators of financial condition and
liquidity.
Dec. 31, 1997 March 31, 1998 Change
(In millions, except debt-to-equity and per share amounts)
Cash and marketable securities $ 212.7 $ 251.1 $ 38.4
Working capital (deficit) (48.7) (38.4) 10.3
Long-term debt
and capital lease obligations 401.4 334.7 (66.7)
Shareholders' equity 475.3 553.1 77.8
Book value per common share $ 26.00 $ 27.23 $ 1.23
Debt-to-equity 46%:54% 38%:62% NA
The Company's cash and marketable securities portfolio increased by $38
million during the first three months of 1998. Operating activities
provided $74 million of cash during this period. Additional cash was
provided by the sale and leaseback of two B737-400 aircraft and two Dash 8-
200 aircraft ($83 million). Cash was used for $122 million of capital
expenditures, including the purchase of three new B737-400 aircraft, two
new Dash 8-200 aircraft, flight equipment deposits and airframe and engine
overhauls and the repayment of debt ($7 million).
Shareholders' equity increased $78 million due to the conversion of $59
million of convertible bonds into common stock, net income of $13 million
and issuance of $6 million of common stock under stock plans.
Year 2000 Computer Issue The Company uses a significant number of computer
software programs and embedded operating systems that were not originally
designed to process dates beyond 1999. The Company has implemented a
project to ensure that the Company's systems will function properly in the
year 2000 and thereafter. The Company anticipates completing this project
for key systems in early 1999 and believes that, with modifications to its
existing software and systems and/or conversions to new software, the year
2000 issue will not pose significant operational problems. The total
direct costs of the Company's year 2000 project are currently estimated at
less than $1 million. Additional systems currently under review may
require further resources. The Company does not expect any cost increases
to have a material effect on its results of operations.
The Company is also in contact with its significant suppliers and vendors
with which its systems interface and exchange data or upon which its
business depends. These efforts are designed to minimize the extent to
which its business will be vulnerable to their failure to remediate their
own year 2000 issues. The Company's business is also dependent upon
certain governmental organizations or entities such as the Federal Aviation
Administration (FAA) that provide essential aviation industry
infrastructure. There can be no assurance that such third parties on which
the Company's business relies will successfully remediate their systems on
a timely basis. The Company's business, financial condition or results of
operations could be materially adversely affected by the failure of its
systems or those operated by other parties to operate properly beyond 1999.
Areas that could be adversely affected include flight operations,
maintenance, planning, reservations, sales, accounting and the frequent
flyer program. To the extent possible, the Company is developing and
executing contingency plans designed to allow continued operation in the
event of failure of third party systems or products.
PART II. OTHER INFORMATION
ITEM 5. Other Information
During the first quarter of 1998, Alaska's mechanics, inspectors, cleaners,
janitors and fleet service employees voted to be represented by the
Aircraft Mechanics Fraternal Association (AMFA) rather than the
International Association of Machinists (IAM). The negotiation of an
initial contract is expected to begin during June 1998. The IAM will
continue to represent Alaska's stock clerks and ramp service employees,
whose contract became amendable August 31, 1997. Negotiation of a new
contract for those employees is expected to resume during the second
quarter of 1998.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27.1 - Financial data schedule for the three months ended March
31, 1998.
Exhibit 27.2 - Financial data schedule for the year ended December 31,
1996, restated to show basic and diluted earnings per share.
Exhibit 27.3 - Financial data schedule for the six months ended June
30, 1996, restated to show basic and diluted earnings per share.
Exhibit 27.4 - Financial data schedule for the nine months ended
September 30, 1996, restated to show basic and diluted earnings per share.
Exhibit 27.5 - Financial data schedule for the six months ended June
30, 1997, restated to show basic and diluted earnings per share.
Exhibit 27.6 - Financial data schedule for the nine months ended
September 30, 1997, restated to show basic and diluted earnings per share.
(b) No reports on Form 8-K were filed during the first quarter of 1998.
Signatures
Pursuant to the requirements of the Securities 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: April 29, 1998
/s/ John F. Kelly
John F. Kelly
Chairman, President and Chief Executive Officer
/s/ Harry G. Lehr
Harry G. Lehr
Senior Vice President/Finance
(Principal Financial Officer)
CONSOLIDATED BALANCE SHEET
Alaska Air Group, Inc.
ASSETS
December 31, March 31,
(In Millions) 1997 1998
Current Assets
Cash and cash equivalents $102.6 $77.7
Marketable securities 110.1 173.4
Receivables - net 72.6 86.0
Inventories and supplies 47.2 46.4
Prepaid expenses and other assets 92.1 97.5
Total Current Assets 424.6 481.0
Property and Equipment
Flight equipment 950.1 987.5
Other property and equipment 258.5 264.6
Deposits for future flight equipment 108.9 95.1
1,317.5 1,347.2
Less accumulated depreciation and amortization 373.8 388.9
943.7 958.3
Capital leases:
Flight and other equipment 44.4 44.4
Less accumulated amortization 27.5 28.0
16.9 16.4
Total Property and Equipment - Net 960.6 974.7
Intangible Assets - Subsidiaries 59.6 59.0
Other Assets 88.3 87.6
Total Assets $1,533.1 $1,602.3
See accompanying notes to consolidated financial statements.
CONSOLIDATED BALANCE SHEET
Alaska Air Group, Inc.
LIABILITIES AND SHAREHOLDERS' EQUITY
December 31, March 31,
(In Millions) 1997 1998
Current Liabilities
Accounts payable $73.9 $81.4
Accrued aircraft rent 60.7 56.2
Accrued wages, vacation and payroll taxes 70.1 53.9
Other accrued liabilities 73.5 85.5
Air traffic liability 166.4 213.2
Current portion of long-term debt and
capital lease obligations 28.7 29.2
Total Current Liabilities 473.3 519.4
Long-Term Debt and Capital Lease Obligations 401.4 334.7
Other Liabilities and Credits
Deferred income taxes 72.3 78.6
Deferred income 19.5 24.2
Other liabilities 91.3 92.3
183.1 195.1
Shareholders' Equity
Common stock, $1 par value
Authorized: 50,000,000 shares
Issued: 1997 - 21,030,762 shares
1998 - 23,062,494 shares 21.0 23.1
Capital in excess of par value 292.5 355.0
Treasury stock, at cost: 1997 - 2,748,030 shares
1998 - 2,748,078 shares (62.6) (62.6)
Deferred compensation (1.8) (1.7)
Retained earnings 226.2 239.3
475.3 553.1
Total Liabilities and Shareholders' Equity $1,533.1 $1,602.3
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENT OF INCOME
Alaska Air Group, Inc.
Three Months Ended March 31
(In Millions Except Per Share Amounts) 1997 1998
Operating Revenues
Passenger $342.9 $378.3
Freight and mail 20.0 21.0
Other - net 17.5 17.1
Total Operating Revenues 380.4 416.4
Operating Expenses
Wages and benefits 122.5 136.9
Contracted services 11.5 13.6
Aircraft fuel 62.7 46.1
Aircraft maintenance 25.2 28.8
Aircraft rent 44.9 47.0
Food and beverage service 11.0 11.4
Commissions 24.8 22.6
Other selling expenses 20.4 21.5
Depreciation and amortization 16.7 17.9
Loss (gain) on sale of assets (0.7) 0.0
Landing fees and other rentals 15.9 16.9
Other 30.9 31.2
Total Operating Expenses 385.8 393.9
Operating Income (Loss) (5.4) 22.5
Nonoperating Income (Expense)
Interest income 1.9 3.9
Interest expense (8.4) (6.8)
Interest capitalized 1.0 1.6
Other - net 0.8 0.8
(4.7) (0.5)
Income (loss) before income tax (10.1) 22.0
Income tax expense (credit) (4.4) 8.9
Net Income (Loss) $(5.7) $13.1
Basic Earnings (Loss) Per Share $(0.39) $0.69
Diluted Earnings (Loss) Per Share $(0.39) $0.56
Shares used for computation:
Basic 14.5 19.1
Diluted 14.5 26.4
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Alaska Air Group, Inc.
Common Capital in Treasury Deferred
Shares Common Excess of Stock Compen- Retained
(In Millions) Outstanding Stock Par Value at Cost sation Earnings Total
Balances at December 31, 1997 18.283 $21.0 $292.5 $(62.6) $(1.8) $226.2 $475.3
Net income for the three months
ended March 31, 1998 13.1 13.1
Stock issued under stock plans 0.163 0.2 5.4 5.6
Stock issued for convertible
subordinated debentures 1.868 1.9 57.1 59.0
Employee Stock Ownership Plan
shares allocated 0.1 0.1
Balances at March 31, 1998 20.314 $23.1 $355.0 $(62.6) $(1.7) $239.3 $553.1
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
Alaska Air Group, Inc.
Three Months Ended March 31 (In Millions) 1997 1998
Cash flows from operating activities:
Net income (loss) $(5.7) $13.1
Adjustments to reconcile net income (loss) to cash:
Depreciation and amortization 16.7 17.9
Amortization of airframe and engine overhauls 8.4 9.6
Loss (gain) on disposition of assets (0.7) -
Deferred income taxes (4.8) 6.3
Increase in accounts receivable (13.0) (13.5)
Decrease (increase) in other current assets 11.0 (4.6)
Increase in air traffic liability 46.5 46.8
Decrease in other current liabilities (16.6) (1.2)
Other-net (5.1) (0.7)
Net cash provided by operating activities 36.7 73.7
Cash flows from investing activities:
Purchases of marketable securities (14.6) (84.2)
Sales and maturities of marketable securities 7.0 20.9
Flight equipment deposits returned - 5.7
Additions to flight equipment deposits (6.7) (12.9)
Additions to property and equipment (32.0) (109.4)
Restricted deposits and other 2.2 (0.5)
Net cash used in investing activities (44.1) (180.4)
Cash flows from financing activities:
Proceeds from short-term borrowings 28.0 -
Repayment of short-term borrowings (47.0) -
Proceeds from sale and leaseback transactions - 82.9
Long-term debt and capital lease payments (6.4) (6.7)
Proceeds from issuance of common stock 1.7 5.6
Net cash provided by (used in) financing activities (23.7) 81.8
Net decrease in cash and cash equivalents (31.1) (24.9)
Cash and cash equivalents at beginning of period 49.4 102.6
Cash and cash equivalents at end of period $18.3 $77.7
Supplemental disclosure of cash paid (received) during the period for:
Interest (net of amount capitalized) $4.7 $4.4
Income taxes (refunds) (4.5) -
Noncash investing and financing activities:
1997 - None
1998 - $59.6 million of convertible debentures were converted into 1.9 million
shares of common stock.
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THAT HAVE CHANGED
SIGNIFICANTLY DURING THE THREE MONTHS ENDED MARCH 31, 1998
Alaska Air Group, Inc.
Note 1. Commitments (See Note 5 to Consolidated Financial Statements at
December 31, 1997)
During the first three months of 1998, Alaska's lease commitments
increased approximately $92 million due to the sale and leaseback of two
B737-400 aircraft under 18-year operating leases. During the first three
months of 1998, Horizon's lease commitments increased approximately $27
million due to the sale and leaseback of two Dash 8-200 aircraft under
15-year operating leases.
Note 2. Earnings per Share (See Note 9 to Consolidated Financial
Statements at December 31, 1997)
Earnings per share (EPS) calculations were as follows) for the three
months ended March 31 (in millions except per share amounts):
1997 1998
Net income (loss) $(5.7) $13.1
Avg. shares outstanding 14.489 19.087
Basic earnings per share $(0.39) $0.69
Net income (loss) $(5.7) $13.1
After-tax interest on:
6-1/2% debentures -- 1.3
6-7/8% debentures -- 0.3
Diluted EPS income $(5.7) $14.7
Avg. shares outstanding 14.489 19.087
Assumed conversion of:
6-1/2% debentures -- 6.002
6-7/8% debentures -- 1.036
Assumed exercise of
stock options -- 0.259
Diluted EPS shares 14.489 26.384
Diluted earnings per share $(0.39) $0.56
Convertible debentures and stock options only enter the diluted EPS
calculation when their individual effect is dilutive.
Note 3. Operating Segment Information (See Note 11 to Consolidated
Financial Statements at December 31, 1997)
Operating segment information for Alaska Airlines, Inc. (Alaska) and
Horizon Air Industries, Inc. (Horizon) for the three months ended March
31 was as follows (in millions):
1997 1998
Operating revenues:
Alaska $311.6 $344.1
Horizon 71.0 75.1
Elimination of
intercompany revenues (2.2) (2.8)
Consolidated $380.4 $416.4
Pretax income (loss):
Alaska $(3.8) $24.1
Horizon (3.8) 0.5
Air Group (2.5) (2.6)
Consolidated $(10.1) $22.0
Total assets at end of period:
Alaska $1,233.3 $1,450.3
Horizon 163.8 162.3
Air Group 525.5 683.1
Elimination of
intercompany accounts (613.9) (693.4)
Consolidated $1,308.7 $1,602.3
Airline Financial and Statistical Data
Quarter Ended March 31
Alaska Airlines Horizon Air
Financial Data (in millions): 1997 1998 % Change 1997 1998 % Change
Operating Revenues:
Passenger $277.4 $309.8 11.7 $67.8 $71.4 5.3
Freight and mail 17.4 18.4 5.7 2.6 2.6 0.0
Other - net 16.8 15.9 (5.4) 0.6 1.1 83.3
Total Operating Revenues 311.6 344.1 10.4 71.0 75.1 5.8
Operating Expenses:
Wages and benefits 99.2 110.7 11.6 23.3 24.1 3.4
Employee profit sharing 0.0 2.0 NM 0.0 0.1 NM
Contracted services 10.0 12.0 20.0 1.6 1.7 6.2
Aircraft fuel 53.7 39.1 (27.2) 9.0 7.0 (22.2)
Aircraft maintenance 14.8 18.3 23.6 10.4 10.5 1.0
Aircraft rent 36.4 37.2 2.2 8.5 9.9 16.5
Food and beverage service 10.6 11.0 3.8 0.5 0.5 0.0
Commissions 22.6 21.6 (4.4) 4.5 3.8 (15.6)
Other selling expenses 16.1 17.2 6.8 4.3 4.3 0.0
Depreciation and amortization 13.7 15.1 10.2 2.9 2.7 (6.9)
Gain on sale of assets 0.0 0.0 (0.7) 0.0 NM
Landing fees and other rentals 12.7 13.3 4.7 3.2 3.6 12.5
Other 23.3 24.1 3.4 7.2 6.5 (9.7)
Total Operating Expenses 313.1 321.6 2.7 74.7 74.7 (0.0)
Operating Income (Loss) (1.5) 22.5 (3.7) 0.4
Interest income 2.4 4.4 0.0 0.0
Interest expense (6.2) (4.7) (0.5) (0.4)
Interest capitalized 0.7 1.1 0.3 0.5
Other - net 0.8 0.8 0.1 0.0
(2.3) 1.6 (0.1) 0.1
Income (Loss) Before Income Tax $(3.8) $24.1 $(3.8) $0.5
Operating Statistics:
Revenue passengers (000) 2,770 2,863 3.4 856 924 7.9
RPMs (000,000) 2,342 2,459 5.0 204 233 14.4
ASMs (000,000) 3,582 3,798 6.0 345 394 14.4
Passenger load factor 65.4% 64.7% (0.7)pts 59.1% 59.0% (0.1)pts
Breakeven load factor 67.1% 60.0% (7.1)pts 63.4% 58.6% (4.8)pts
Yield per passenger mile 11.84c 12.60c 6.4 33.30c 30.65c (7.9)
Operating revenue per ASM 8.7c 9.1c 4.1 20.6c 19.1c (7.5)
Operating expenses per ASM 8.7c 8.5c (3.1) 21.7c 19.0c (12.5)
Fuel cost per gallon 83.2c 57.5c (30.8) 87.9c 61.8c (29.7)
Fuel gallons (000,000) 64.6 67.9 5.1 10.3 11.3 9.7
Average number of employees 7,921 8,353 5.4 2,812 2,783 (1.0)
Aircraft utilization (block hours) 11.2 11.2 0.0 7.0 7.4 5.7
Operating fleet at period-end 75 80 6.7 59 53 (10.2)
NM = Not Meaningful
c = cents
5
1000
3-MOS
DEC-31-1998
MAR-31-1998
77700
173400
86000
0
46400
481000
1391600
416900
1602300
519400
334700
0
0
23100
530000
1602300
416400
416400
393900
393900
0
0
6800
22000
8900
13100
0
0
0
13100
.69
.56
5
1000
YEAR
DEC-31-1996
DEC-31-1996
49400
52400
71000
1300
47800
300200
1215200
351800
1311400
485800
404100
0
0
17200
255300
1311400
1592200
1592200
1503200
1503200
0
0
38400
64300
26300
38000
0
0
0
38000
2.67
2.05
5
1000
6-MOS
DEC-31-1996
JUN-30-1996
53000
52100
89200
0
46000
323700
1208700
358800
1324800
453500
483700
0
0
17200
227500
1324800
768100
768100
732900
732900
0
0
20900
19400
8600
10800
0
0
0
10800
.77
.66
5
1000
9-MOS
DEC-31-1996
SEP-30-1996
51900
79400
77800
0
46300
325000
1214800
358000
1331900
439000
452900
0
0
17200
260500
1331900
1233000
1233000
1135600
1135600
0
0
30200
76000
32400
43600
0
0
0
43600
3.08
2.22
5
1000
6-MOS
DEC-31-1997
JUN-30-1997
82300
46300
93600
0
47300
340800
1282800
374100
1400300
525800
418500
0
0
17300
272800
1400300
815400
815400
779900
779900
0
0
17000
26400
11300
15100
0
0
0
15100
1.04
0.84
5
1000
9-MOS
DEC-31-1997
SEP-30-1997
98700
93300
88100
0
46000
62800
1302100
387400
1450700
507800
411600
0
0
17500
318600
1450700
1316600
1316600
1204800
1204800
0
0
25600
98900
41600
57300
0
0
0
57300
3.93
2.80
