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Alaska Air Group reports record second quarter profit
Revenue gains, effective cost management push earnings higher
July 25, 2006
Alaska Air Group today reported second quarter net income of $55.5 million, compared to $17.4 million in the second quarter of 2005.
The 2006 results include a restructuring charge of $3.8 million resulting from an offer of voluntary severance to Alaska’s flight attendants as part of the recently ratified contract.
Both periods include mark-to-market fuel hedge accounting gains and losses, and the second quarter of 2005 includes restructuring charges that also impact the comparability of the periods.
Excluding the impact of the items noted above, the company would have reported net income in the second quarter of 2006 of $60.3 million, compared to $24.7 million in the second quarter of 2005.
“We are extremely pleased with this quarter’s earnings, which were the result of a combination of revenue gains and cost improvements,” said CEO Bill Ayer. “It’s gratifying to see everyone’s hard work pay off, and I would like to thank and congratulate our employees on an outstanding quarter.”
Alaska Airlines’ passenger traffic in the second quarter increased 7.2 percent on a capacity increase of 5.2 percent. The airline’s load factor increased 1.4 percentage points to 79.3 percent, compared to the same period in 2005. Alaska’s operating revenue per available seat mile (ASM) increased 9.5 percent, while its operating cost per ASM excluding fuel and restructuring charges and adjustments decreased 2.1 percent.
Alaska’s pretax income for the quarter was $72.5 million, compared to $22.1 million in 2005.
Excluding the items noted above, Alaska would have reported pretax income of $79.6 million for the quarter, compared to $34.2 million in the second quarter of 2005.
Horizon Air’s passenger traffic in the second quarter increased 11.3 percent on a 6.1 percent capacity increase.
Horizon’s load factor increased by 3.6 percentage points to 76.6 percent, compared to the same period in 2005.
The airline’s operating revenue per ASM increased 9 percent, and its operating cost per ASM excluding fuel increased 9.8 percent.
Horizon’s pretax income for the quarter was $9.7 million, compared to $11.1 million in 2005. Excluding the mark-to-market fuel hedge adjustments, Horizon’s pretax income would have been $10.2 million for the quarter, compared to $10.7 million in the second quarter of 2005.
Alaska Air Group had cash and short-term investments at June 30 of approximately $1.1 billion compared to $983 million at Dec. 31, 2005.
The company’s debt-to-capital ratio, assuming aircraft operating leases are capitalized at seven times annualized rent, was 69 percent as of June 30, compared to 73 percent as of Dec. 31, 2005.
The decrease from Dec. 31, 2005, is primarily due to the conversion to equity of the company’s senior convertible notes in April 2006, partially offset by the $23.6 million net loss for the six months, coupled with an increase in the company’s outstanding debt resulting from new aircraft-secured debt arrangements in the first six months of 2006.
Revenue gains, effective cost management push earnings higher
July 25, 2006
Alaska Air Group today reported second quarter net income of $55.5 million, compared to $17.4 million in the second quarter of 2005.
The 2006 results include a restructuring charge of $3.8 million resulting from an offer of voluntary severance to Alaska’s flight attendants as part of the recently ratified contract.
Both periods include mark-to-market fuel hedge accounting gains and losses, and the second quarter of 2005 includes restructuring charges that also impact the comparability of the periods.
Excluding the impact of the items noted above, the company would have reported net income in the second quarter of 2006 of $60.3 million, compared to $24.7 million in the second quarter of 2005.
“We are extremely pleased with this quarter’s earnings, which were the result of a combination of revenue gains and cost improvements,” said CEO Bill Ayer. “It’s gratifying to see everyone’s hard work pay off, and I would like to thank and congratulate our employees on an outstanding quarter.”
Alaska Airlines’ passenger traffic in the second quarter increased 7.2 percent on a capacity increase of 5.2 percent. The airline’s load factor increased 1.4 percentage points to 79.3 percent, compared to the same period in 2005. Alaska’s operating revenue per available seat mile (ASM) increased 9.5 percent, while its operating cost per ASM excluding fuel and restructuring charges and adjustments decreased 2.1 percent.
Alaska’s pretax income for the quarter was $72.5 million, compared to $22.1 million in 2005.
Excluding the items noted above, Alaska would have reported pretax income of $79.6 million for the quarter, compared to $34.2 million in the second quarter of 2005.
Horizon Air’s passenger traffic in the second quarter increased 11.3 percent on a 6.1 percent capacity increase.
Horizon’s load factor increased by 3.6 percentage points to 76.6 percent, compared to the same period in 2005.
The airline’s operating revenue per ASM increased 9 percent, and its operating cost per ASM excluding fuel increased 9.8 percent.
Horizon’s pretax income for the quarter was $9.7 million, compared to $11.1 million in 2005. Excluding the mark-to-market fuel hedge adjustments, Horizon’s pretax income would have been $10.2 million for the quarter, compared to $10.7 million in the second quarter of 2005.
Alaska Air Group had cash and short-term investments at June 30 of approximately $1.1 billion compared to $983 million at Dec. 31, 2005.
The company’s debt-to-capital ratio, assuming aircraft operating leases are capitalized at seven times annualized rent, was 69 percent as of June 30, compared to 73 percent as of Dec. 31, 2005.
The decrease from Dec. 31, 2005, is primarily due to the conversion to equity of the company’s senior convertible notes in April 2006, partially offset by the $23.6 million net loss for the six months, coupled with an increase in the company’s outstanding debt resulting from new aircraft-secured debt arrangements in the first six months of 2006.
