Thursday, January 22, 2015

Alaska Airlines fights back against the empire of Delta

If you thought the Seattle invasion by Delta Air Lines would dislodge Seattle-based Alaska Air Group, think again.

Alaska reported record profit and decreasing costs for the fourth quarter, and executives struck a note of confidence during the earnings call Thursday.

Alaska Air Group, which includes Alaska Airlines and Horizon Air, reported a record $571 million in net 2014 income excluding special items, up 49 percent from the year before. Alaska's passenger revenue grew 7 percent for the year.

"Alaska has real and durable competitive advantages that will help us sustain these results going forward," said Brandon Pedersen, chief financial officer.

"We're safe, we run an excellent operation, we offer award-winning service, have really loyal customers, a great network, low costs, a modern fuel-efficient fleet, a strong balance sheet, and engaged employees."

Alaska's shares, which had dipped to as low as $36.31 during the last 12 months, rose by more than 3 percent by midday Thursday and were trading at around $68.

The fight between Alaska and rival Delta Airlines has gotten national attention, as the much-larger Atlanta-based Delta, a global carrier, has gone head-to-head against Alaska on routes in the Pacific Northwest.

Alaska entered 16 new markets last year, for a total of 76 out of Seattle-Tacoma International Airport, four times the number of offerings of Delta from the airport , said Andrew Harrison, Alaska's senior vice president for planning.

Alaska said its mileage plan membership grew 11 percent last year, and has doubled in the last five years.

"Underlying demand is strong," Harrison said. "Competitive capacity, while high, has moderated versus previous expectations. Initiatives developed are working well. Members in loyalty programs are growing at unprecedented rate.

In general, new markets are exceeding expectations. This gives us confidence we are entering 2015 on a strong footing."

(Steve Wilhelm - Puget Sound Business Journal)

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