AS Record Profit...and reasons why...

[Mookie]

Air Group lands record
$118 mil. summer profit

More passengers and lower costs bring
carriers close to annual profit margin goal
October 21, 2010
The bottom line: $118.1 million profit
Alaska Air Group earned a record profit of $118.1 million in July through September, after paying taxes and adjusting for fuel hedges, Horizon restructuring and CRJ-700 fleet transition costs. Under Generally Accepted Accounting Principles, the company earned a profit of $122.4 million.

Air Group’s 2010 adjusted pretax profit so far totals $215.2 million — the most it has ever made during the first nine months of a year. That translates into a 9.2 percent return on invested capital (ROIC) in 2010 — just shy of the goal of 10 percent. (which is ridiculously ambitious)

Why we made a profit

Passenger traffic and revenue rose: Despite a sluggish economy, Alaska and Horizon flew 6.4 million passengers during the summer. That’s a 7.6 percent uptick for Alaska and 0.7 percent for Horizon, compared with 2009. But stronger demand didn’t translate into higher fares. Customers paid about the same to fly on the two carriers as they did in the summer of 2009. Even so, increased passenger traffic, higher freight and mail shipments, and more nonticket income boosted total operating revenues for Alaska and Horizon by $100 million, or 10.3 percent, for the quarter.

While costs fell: Alaska Airlines’ nonfuel unit costs fell 4.7 percent to 7.52 cents per available seat mile (ASM).

Productivity up, overhead down: Although passenger traffic rose last quarter, the number of full-time equivalent employees fell 2.9 percent. This boosted productivity to 174 customers per employee — the best level since summer 2007 — as Airport of the Future, alaskaair.com and other new technologies enabled employees to handle passengers more efficiently. Meanwhile, overhead costs were $8.6 million lower compared with 2009. (Do less with more...no wonder everyone has black bags beneath their eyes)

Planes are fuller: More people traveling, moderate schedule growth and reduced flying in some weaker markets pushed up load factors to records for both Air Group carriers — 3 points to 85.3 percent at Alaska and 2.1 points to 80.0 percent at Horizon. (we got really lucky and ya'll bought a buttload of tickets)

And they’re in the air more: Alaska Airlines’ departures increased 2.6 percent as aircraft utilization climbed 5.1 percent to an average of 10.4 block hours a day.(looking at in air refueling option for next gen -800's)

Nonticket revenue still rising: For the first nine months of 2010, nonticket revenue for the two carriers jumped 47 percent to $202 million — or $11.52 per passenger. This was largely due to customer service agents collecting the first checked bag fee, reservations agents consistently assessing change fees and flight attendants selling more onboard products. This chart summarizes the nonticket products and services that Alaska and Horizon sell. (Bags and Beef Jerkey baby....)

Other highlights

Record profits could mean record bonus: For the first nine months of 2010,Alaska Airlines has accrued a record $52 million for employee Operational Performance Rewards (OPR), Performance Based Pay (PBP) and profit sharing bonuses. This is up 18.2 percent from $44 million a year ago and it amounts to a potential bonus equal to 9.25 percent of eligible earnings for PBP participants. Actual 2010 payouts for PBP and profit sharing will depend on full-year results. Click here to calculate your estimated bonus.(ie, the more you vsa, the bigger the check. capitolism at it's best)

Fuel rising: Alaska Airlines paid $29.4 million, or 17 percent, more for fuel during the summer than in 2009, despite its hedging benefit.(let's just hope the middle east stays the current level of F'd up)

Growth forecast: Alaska plans to increase ASMs 9 percent during the fourth quarter, bringing total capacity growth for 2010 to a little more than 5 percent. With the help of additional Hawaii flying, the airline plans capacity growth of about 8 percent next year. Alaska will take delivery of three new aircraft in the first quarter of 2011. (replacements? New planes? mysterious 400's coming out of the woodwork?)

Financial strength: Air Group had $1.3 billion in cash at the end of September, despite prepaying $115 million of debt. The company plans to prepay up to $200 million of debt through early 2011 to improve its financial strength. (shhhhh........)

Pension contribution: Alaska Airlines contributed $15 million to its defined benefit pension plans, bringing total contributions to $45 million this year. (b/c you have too...)

What’s happening at Horizon: During the third quarter, Horizon announced it will move to an all-capacity-purchase business model in 2011. It outsourced its heavy maintenance operation in Portland and reached a tentative agreement on a new pilot contact. Horizon plans to accelerate a previously announced decision to go with an all-Q400 fleet. It also intends to shrink capacity by about 6 percent in the fourth quarter, resulting in about 2 percent less capacity for all of 2010.(this will get veeeerrrryyyyy interesting)




Nice job guys, now just please just let us do our thing w/o a merger


....and bring the fuggin furloughs back!!!!



Mookie

 

[NWaviator]

Congrats AS. Doing great and a 9% increase in the 4Q nice. Have the routes been announced?

Now the world is falling at QX:
"As you know, another cornerstone of Horizon's transformation plan is accelerating the transition to an all-Q400 fleet, and we're currently finalizing two deals related to this. One is an agreement with another carrier to sublease eight of the remaining 13 CRJ-700s by mid-2011. The other is an agreement with Bombardier to deliver the eight Q400s remaining in our firm order as the CRJ-700s exit our fleet, minimizing the impact on our co-workers and our customers. At the same time, we're actively remarketing the five remaining CRJ-700s, so we can start reaping the benefits of a single-type fleet by the end of 2011. Those benefits are substantial, as we've seen from the major cost savings Alaska has experienced since migrating to a Boeing 737 fleet."

Someone is getting some RJs.

 

[RNP.15]

Now lets buy Hawaiian and lock up the islands!

 

[johnsonrod]

Now lets buy Hawaiian and lock up the islands!

You may be getting rid of RJs to fit into Delta's scope clause? Then you can buy Hawaiian and then Delta will buy you guys. Prepare to be assimilated.

 

[dashtrash]

Now lets buy Hawaiian and lock up the islands!

Show me where it's written in the cba that we would have one list as a result. Be careful what you wish for.

 

[charlieB]

$215 mill profit, and $202 of that was attributable to "non-ticketing" revenues? Generating lots of revenue without additional expense is commendable (heck, it's capitalism at its best), but hardly a validation of a well-run operation. Without the $202 m. boost, 2010-to-date would be a mediocre year and Alaska would be staring down another round of efficiency reviews.

 

[Old School 737]

New VP message out!! New bid on 25th with more recalls!!!!!!

 

[RNP.15]

It was tryed with Jet America and all flying ended up on one list. Hawaiian is not flying Dash-8's and both groups are ALPA.

 

[wscrj]

6 recalls a month now from October thru March. Welcome back!

 

[igneousy2]

Show me where it's written in the cba that we would have one list as a result. Be careful what you wish for.

I'm hoping it's in Hawaiians because it ain't in Alaska's