Alaska Airlines Boeing 737-990 (30018/1326) N318AS "Spirit of Disneyland II" departs Los Angeles International Airport (LAX/KLAX) on December 19, 2012.
(Photo by Michael Carter)
Alaska Air Group, parent of Alaska Airlines and Horizon Air, reported GAAP net income of $274 million for the third-quarter, up 38.4% year-over-year (YOY). Alaska had net income of $198 million in the 2014 September quarter. In the 2015 first quarter, Alaska’s net take was $149 million; for the 2015 second-quarter, the group’s net profit was a then-record $234 million.
“This was the biggest summer in our 83-year history and represents our highest quarterly profit ever,” Alaska Air Group CEO Brad Tilden said.
Alaska Air Group’s third-quarter consolidated operating revenue was $1.52 billion, up 3.4% YOY.
Operating expenses were down 5.8% YOY to $1.08 billion, resulting in $433 billion in operating income for the quarter, up 37% YOY. Additionally, the company reported mark-to-market fuel hedge adjustments of $5 million in the third-quarter, which came to $3 million after tax, or two cents per diluted share.
“Our $442 million pre-tax profit for the quarter equates to a pre-tax margin of 29.2%, which is 740 basis points higher than last year,” Tilden told analysts and reporters. “In fact, this quarterly profit is larger than all but four of the annual profits we’ve produced in our 83-year history. We expect our margin performance to lead the US industry this quarter and also be better than about 90% of the companies in the S&P 500.”
“Our ROIC for the trailing 12 months is 24.2% … driven by higher revenues, by strong non-fuel-cost performance and by a large benefit from lower fuel costs,” Tilden said. “Despite continued competition 2015 is shaping up to be a year of record profitability.
Pre-tax income for the first nine months of the year is over $1 billion … about $130 million higher than our full-year result for last year. And year-to-date cash flow from operations is $1.2 billion, which is enabling us to reinvest in the business and return a substantial amount of cash to our shareholders.”
The group’s consolidated third-quarter traffic was up 7.7% YOY to 8.88 billion RPMs, with capacity up 8.2% YOY to 10.37 billion ASMs; the consolidated passenger load factor for the group was 85.6% for the quarter, down 0.4 point YOY. Revenue passengers carried totaled 8.62 million, up 7.8% YOY. Alaska Air Group’s regional service—included in the consolidated figures—includes capacity purchased by Alaska from regional carriers Horizon Air, SkyWest and PenAir.
Tilden highlighted Alaska’s 86.4% on-time performance for the year-to-date as “the highest percentage of the US airlines with the exception of Hawaiian.” And he noted the company’s status as launch customer for Boeing’s new Space Bins, which were introduced on Oct. 9.
“We garnered national media attention …these new bins will allow us to carry up to 57 additional bags on each 737-900ER and that’s a 57% increase in bag space,” Tilden said. Alaska intends to have 69 of its aircraft—46% of its passenger fleet—outfitted with Space Bins by 2017.
The consolidated group’s yield was down 3.5% YOY to 14.61 cents as RASM decreased 4.4% YOY to 14.61 cents; CASM ex-fuel was up 2.5% YOY to 8.07 cents.
The group’s mainline operations—Alaska Airlines – carried 6.17 million passengers during the third-quarter, up 7.3% YOY. Traffic increased 7.2% YOY to 7.98 billion RPMs and capacity was 7.8% YOY to 9.28 billion ASMs. Alaska Airlines’ passenger load factor for the quarter came to 86%, down 0.4 points YOY.
(Mark Nensel - ATWOnline News)