UNITED STATES SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
Pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
April 22, 2003
(Date of Report)
ALASKA AIR GROUP, INC.
Delaware (State or other jurisdiction of incorporation or organization) |
91-1292054 (I.R.S. Employer Identification No.) |
19300 Pacific Highway South, Seattle, Washington 98188
(Address of principal executive offices)
(206) 431-7040
(Registrants telephone number)
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ITEM 7. Financial Statements and Exhibits. | ||||||||
ITEM 9. Regulation FD Disclosure. | ||||||||
Signature | ||||||||
EXHIBIT 99.1 |
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. 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 Companys Annual Report on Form 10-K for the year ended December 31, 2002. The Company expressly disclaims any duty to update these projections, and makes no representation as to their continued accuracy in the event it does not provide such updates.
ITEM 7.
Financial Statements and Exhibits.
(c) Exhibits
Exhibit 99.1 | Press Release dated April 22, 2003 titled Alaska Air Group Reports First Quarter Results |
ITEM 9.
Regulation FD Disclosure (Including Item 12 Information)
Pursuant to ITEM 12, the Registrant hereby furnishes its First Quarter 2003 Earnings Release.
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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: April 22, 2003 | ||
/s/ Terri K. Maupin
Terri K. Maupin Staff Vice President/Finance and Controller |
||
/s/ Bradley D. Tilden
Bradley D. Tilden Executive Vice President/Finance and Chief Financial Officer |
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Exhibit 99.1
Contact: |
Brad Tilden 206/433-3362 |
-or- | Lou Cancelmi 206/433-3170 |
FOR IMMEDIATE RELEASE | April 22, 2003 |
ALASKA AIR GROUP REPORTS FIRST QUARTER RESULTS
SEATTLE Alaska Air Group, Inc. (NYSE:ALK) today reported a first quarter net loss of $56.3 million, or $2.12 per share, compared with a net loss of $85.1 million, or $3.21 per share, during the corresponding quarter in 2002. The first quarter results were negatively impacted by increased fuel prices and lower demand resulting from the war in Iraq and a sluggish U.S. economy. The companys first quarter results for 2002 include a $51.4 million charge related to the write-off of goodwill in connection with the adoption of Statement of Financial Accounting Standards No. 142. Excluding this charge, the company lost $33.7 million or $1.27 per share in the first quarter of 2002.
The combination of a flagging economy, higher fuel prices and the war in Iraq made this a difficult quarter for both Alaska Air Group and the industry, said John F. Kelly, chairman and chief executive officer. Were finding that we can continue to grow, contrary to most of the industry, but its clear that well need to continue to adjust our business model by achieving our cost management goals.
During the quarter, Alaska successfully completed the private placement of $150 million of floating rate convertible bonds. These proceeds strengthen an already strong liquidity position, and enhance our ability to implement our strategy and further position Alaska for success in this changing marketplace, said Kelly.
Operationally, Alaska Airlines passenger traffic in the first quarter increased 5.6 percent on a capacity increase of 5.4 percent. Load factor was consistent with the prior year at 66.7 percent. The airlines operating revenue per available seat mile (ASM) decreased 1.7 percent, while its operating cost per ASM excluding fuel decreased 1.3 percent. Alaskas pretax loss was $70.6 million compared to a pretax loss of $41.7 million a year earlier.
-more-
Exhibit 99.1
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Horizon Airs passenger traffic in the first quarter increased 8.6 percent on a 15.9 percent capacity increase. Load factor decreased by 3.9 points to 58.1 percent. The airlines operating revenue per ASM decreased 8.5 percent, while its operating cost per ASM excluding fuel decreased 7.5 percent. Horizons pretax loss was $15.3 million, compared to a pretax loss of $10.2 million a year earlier.
Alaska Air Group continues to have a strong cash position at March 31, 2003 with approximately $616 million in cash and marketable securities. The companys debt-to-capital ratio, assuming aircraft operating leases are capitalized at seven times annualized rent, was 79 percent.
A conference call regarding the first quarter results will be simulcast via the Internet at 8:30 a.m. Pacific Standard Time. It may be accessed through the companys 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 companys 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.
# # #
Exhibit 99.1
Alaska Air Group, Inc.
CONDENSED CONSOLIDATED BALANCE SHEET (unaudited)
December 31 | March 31 | |||||||
(In Millions Except Per Share Amounts) | 2002 | 2003 | ||||||
Cash and marketable securities |
$ | 636 | $ | 616 | ||||
Total current assets |
976 | 990 | ||||||
Property and equipment-net |
1,780 | 1,839 | ||||||
Other assets |
125 | 163 | ||||||
Total assets |
$ | 2,881 | $ | 2,992 | ||||
Current liabilities |
778 | 832 | ||||||
Long-term debt and capital lease obligations |
857 | 979 | ||||||
Other liabilities and credits |
590 | 581 | ||||||
Shareholders equity |
656 | 600 | ||||||
Total liabilities and equity |
$ | 2,881 | $ | 2,992 | ||||
SUPPLEMENTAL TABLE
During 2002 and 2003, the Companys diluted loss per share (EPS) and net loss were impacted by the following (dollars in millions):
Three Months Ended March 31 | ||||||||||||||||
2002 | 2003 | |||||||||||||||
Dollars | EPS | Dollars | EPS | |||||||||||||
Net loss and diluted EPS excluding
non-recurring items |
$ | (33.7 | ) | $ | (1.27 | ) | $ | (56.3 | ) | $ | (2.12 | ) | ||||
Change in accounting principle relating to goodwill |
(51.4 | ) | (1.94 | ) | | | ||||||||||
Reported amounts |
$ | (85.1 | ) | $ | (3.21 | ) | $ | (56.3 | ) | $ | (2.12 | ) | ||||
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Exhibit 99.1
Alaska Air Group, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Three Months Ended March 31 | |||||||||
(In Millions Except Per Share Amounts) | 2002 | 2003 | |||||||
Operating Revenues |
|||||||||
Passenger |
$ | 455.9 | $ | 475.5 | |||||
Freight and mail |
17.1 | 18.6 | |||||||
Other net |
27.1 | 24.6 | |||||||
Total Operating Revenues |
500.1 | 518.7 | |||||||
Operating Expenses |
|||||||||
Wages and benefits |
202.9 | 227.1 | |||||||
Contracted services |
24.7 | 25.7 | |||||||
Aircraft fuel |
64.7 | 90.2 | |||||||
Aircraft maintenance |
43.2 | 46.5 | |||||||
Aircraft rent |
46.5 | 46.9 | |||||||
Food and beverage service |
14.3 | 13.4 | |||||||
Commissions |
12.4 | 3.3 | |||||||
Other selling expenses |
30.2 | 27.2 | |||||||
Depreciation and amortization |
32.3 | 32.4 | |||||||
Loss (gain) on sale of assets |
(0.6 | ) | 0.1 | ||||||
Landing fees and other rentals |
29.8 | 37.1 | |||||||
Other |
49.3 | 47.4 | |||||||
Total Operating Expenses |
549.7 | 597.3 | |||||||
Operating Loss |
(49.6 | ) | (78.6 | ) | |||||
Nonoperating Income (Expense) |
|||||||||
Interest income |
4.4 | 0.6 | |||||||
Interest expense |
(11.9 | ) | (11.1 | ) | |||||
Interest capitalized |
0.2 | 0.8 | |||||||
Other net |
4.5 | 0.4 | |||||||
(2.8 | ) | (9.3 | ) | ||||||
Loss before income tax and accounting change |
(52.4 | ) | (87.9 | ) | |||||
Income tax benefit |
(18.7 | ) | (31.6 | ) | |||||
Loss before accounting change |
(33.7 | ) | (56.3 | ) | |||||
Cumulative effect of accounting change |
(51.4 | ) | | ||||||
Net Loss |
$ | (85.1 | ) | $ | (56.3 | ) | |||
Basic and Diluted Loss Per Share: |
|||||||||
Loss before accounting change |
$ | (1.27 | ) | $ | (2.12 | ) | |||
Cumulative effect of accounting change |
(1.94 | ) | | ||||||
Net Loss Per Share |
$ | (3.21 | ) | $ | (2.12 | ) | |||
Shares used for computation: |
|||||||||
Basic |
26.532 | 26.582 | |||||||
Diluted |
26.532 | 26.582 |
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Exhibit 99.1
Alaska Airlines Financial and Statistical Data
Three Months Ended March 31 | ||||||||||||
% | ||||||||||||
2002 | 2003 | Change | ||||||||||
Financial Data (in millions): |
||||||||||||
Operating Revenues: |
||||||||||||
Passenger |
$ | 374.0 | $ | 387.0 | 3.5 | % | ||||||
Freight and mail |
15.9 | 17.4 | 9.4 | % | ||||||||
Other net |
22.3 | 22.6 | 1.3 | % | ||||||||
Total Operating Revenues |
412.2 | 427.0 | 3.6 | % | ||||||||
Operating Expenses: |
||||||||||||
Wages and benefits |
165.7 | 188.0 | 13.5 | % | ||||||||
Contracted services |
21.8 | 20.7 | -5.0 | % | ||||||||
Aircraft fuel |
55.2 | 76.9 | 39.3 | % | ||||||||
Aircraft maintenance |
35.6 | 37.9 | 6.5 | % | ||||||||
Aircraft rent |
31.8 | 30.5 | -4.1 | % | ||||||||
Food and beverage service |
13.9 | 12.9 | -7.2 | % | ||||||||
Commissions |
14.2 | 8.2 | -42.3 | % | ||||||||
Other selling expenses |
24.9 | 21.9 | -12.0 | % | ||||||||
Depreciation and amortization |
28.2 | 28.5 | 1.1 | % | ||||||||
Loss on sale of assets |
| 0.3 | NM | |||||||||
Landing fees and other rentals |
23.6 | 28.7 | 21.6 | % | ||||||||
Other |
36.3 | 34.1 | -6.1 | % | ||||||||
Total Operating Expenses |
451.2 | 488.6 | 8.3 | % | ||||||||
Operating Loss |
(39.0 | ) | (61.6 | ) | 57.9 | % | ||||||
Interest income |
5.0 | 1.2 | ||||||||||
Interest expense |
(11.9 | ) | (11.3 | ) | ||||||||
Interest capitalized |
0.1 | 0.7 | ||||||||||
Other net |
4.1 | 0.4 | ||||||||||
(2.7 | ) | (9.0 | ) | |||||||||
Loss Before Income Tax before Accounting Change |
$ | (41.7 | ) | $ | (70.6 | ) | 69.3 | % | ||||
Operating Statistics: |
||||||||||||
Revenue passengers (000) |
3,193 | 3,258 | 2.0 | % | ||||||||
RPMs (000,000) |
2,977 | 3,143 | 5.6 | % | ||||||||
ASMs (000,000) |
4,467 | 4,708 | 5.4 | % | ||||||||
Passenger load factor |
66.7 | % | 66.7 | % | 0.0 | pts | ||||||
Breakeven load factor |
76.0 | % | 80.5 | % | 4.5 | pts | ||||||
Yield per passenger mile |
12.56 | ¢ | 12.31 | ¢ | -2.0 | % | ||||||
Operating revenue per ASM |
9.23 | ¢ | 9.07 | ¢ | -1.7 | % | ||||||
Operating expenses per ASM |
10.10 | ¢ | 10.38 | ¢ | 2.7 | % | ||||||
Expense per ASM excluding fuel |
8.87 | ¢ | 8.75 | ¢ | -1.3 | % | ||||||
Fuel cost per gallon |
73.6 | ¢ | 99.1 | ¢ | 34.7 | % | ||||||
Fuel gallons (000,000) |
75.0 | 77.6 | 3.5 | % | ||||||||
Average number of employees |
9,815 | 9,988 | 1.8 | % | ||||||||
Aircraft utilization (blk hrs/day) |
10.1 | 10.3 | 2.4 | % | ||||||||
Operating fleet at period-end |
102 | 106 | 3.9 | % |
NM = Not Meaningful
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Exhibit 99.1
Horizon Air Financial and Statistical Data
Three Months Ended March 31 | ||||||||||||
% | ||||||||||||
2002 | 2003 | Change | ||||||||||
Financial Data (in millions): |
||||||||||||
Operating Revenues: |
||||||||||||
Passenger |
$ | 86.3 | $ | 94.0 | 8.9 | % | ||||||
Freight and mail |
1.2 | 1.2 | 0.0 | % | ||||||||
Other net |
5.7 | 3.7 | -35.1 | % | ||||||||
Total Operating Revenues |
93.2 | 98.9 | 6.1 | % | ||||||||
Operating Expenses: |
||||||||||||
Wages and benefits |
37.3 | 39.1 | 4.8 | % | ||||||||
Contracted services |
3.9 | 6.6 | 69.2 | % | ||||||||
Aircraft fuel |
9.5 | 13.3 | 40.0 | % | ||||||||
Aircraft maintenance |
7.6 | 8.6 | 13.2 | % | ||||||||
Aircraft rent |
14.8 | 16.4 | 10.8 | % | ||||||||
Food and beverage service |
0.4 | 0.5 | 25.0 | % | ||||||||
Commissions |
2.3 | 0.6 | -73.9 | % | ||||||||
Other selling expenses |
5.3 | 5.3 | 0.0 | % | ||||||||
Depreciation and amortization |
3.9 | 3.6 | -7.7 | % | ||||||||
Gain on sale of assets |
(0.6 | ) | (0.2 | ) | NM | |||||||
Landing fees and other rentals |
6.4 | 8.7 | 35.9 | % | ||||||||
Other |
12.7 | 11.5 | -9.4 | % | ||||||||
Total Operating Expenses |
103.5 | 114.0 | 10.1 | % | ||||||||
Operating Loss |
(10.3 | ) | (15.1 | ) | 46.6 | % | ||||||
Interest expense |
(0.5 | ) | (0.3 | ) | ||||||||
Interest capitalized |
0.2 | 0.1 | ||||||||||
Other net |
0.4 | 0.0 | ||||||||||
0.1 | (0.2 | ) | ||||||||||
Loss Before Income Tax before Accounting Change |
$ | (10.2 | ) | $ | (15.3 | ) | 50.0 | % | ||||
Operating Statistics: |
||||||||||||
Revenue passengers (000) |
1,095 | 1,088 | -0.6 | % | ||||||||
RPMs (000,000) |
329 | 357 | 8.6 | % | ||||||||
ASMs (000,000) |
531 | 616 | 15.9 | % | ||||||||
Passenger load factor |
62.0 | % | 58.1 | % | (3.9 | )pts | ||||||
Breakeven load factor |
69.5 | % | 68.3 | % | (1.2 | )pts | ||||||
Yield per passenger mile |
26.22 | ¢ | 26.30 | ¢ | 0.3 | % | ||||||
Operating revenue per ASM |
17.55 | ¢ | 16.07 | ¢ | -8.5 | % | ||||||
Operating expenses per ASM |
19.49 | ¢ | 18.53 | ¢ | -4.9 | % | ||||||
Expense per ASM excluding fuel |
17.70 | ¢ | 16.37 | ¢ | -7.5 | % | ||||||
Fuel cost per gallon |
77.2 | ¢ | 102.0 | ¢ | 32.1 | % | ||||||
Fuel gallons (000,000) |
12.3 | 13.0 | 5.7 | % | ||||||||
Average number of employees |
3,452 | 3,415 | -1.1 | % | ||||||||
Aircraft utilization (blk hrs/day) |
7.1 | 7.8 | 9.9 | % | ||||||||
Operating fleet at period-end |
62 | 59 | -4.8 | % |
NM = Not Meaningful
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