Alaska Air Group narrowed it's 1st Quarter loss - but it's still a loss.
Contact: Brad Tilden -or- Lou Cancelmi
FOR IMMEDIATE RELEASE April 23, 2004
ALASKA AIR GROUP REPORTS FIRST QUARTER RESULTS
SEATTLE — Alaska Air Group, Inc. (NYSE:ALK) today reported a first quarter net loss of $42.7 million, or $1.59 per diluted share, compared to a net loss of $56.3 million, or $2.12 per diluted share, in the first quarter of 2003.
First quarter results include an impairment charge of $2.4 million ($1.6 million, net of tax, or $0.06 per share), related to Horizon’s F-28 aircraft and related spare engines. The first quarter results reflect higher passenger revenue at both Alaska Airlines and Horizon Air compared to the same period in 2003, partially offset by exceedingly high jet fuel costs. Higher than expected winter traffic and improved yields resulted in an increase in passenger revenue of $77.8 million ($62.3 million at Alaska Airlines and $12.0 million at Horizon Air), or 16.4 percent, as compared to the same period in 2003. Aircraft fuel costs increased $18.0 million, or 20.1 percent, versus 2003.
"The first quarter is traditionally our weakest, and this one included the added burden of high fuel prices and a severe winter storm," said Bill Ayer, chairman and CEO of Alaska Air Group. "Despite these obstacles, we narrowed our year-over-year loss by $13.6 million, or 24.2 percent. But the bottom line is that we had a sizable loss, illustrating that we still have work ahead.
"I'm encouraged, though, by the fact that we continue to move in the right direction. This marked the seventh consecutive quarter we realized year-over-year improvements in our cost structure at Alaska and the sixth of seven quarters at Horizon. One particularly gratifying aspect to the quarter was that revenues increased due largely to double-digit growth in passenger boardings at both Alaska and Horizon. That's a strong endorsement of our value proposition - outstanding service at the right price, delivered by caring employees."
Operationally, Alaska Airlines' passenger traffic in the first quarter increased 13.9 percent on a capacity increase of 10.0 percent. Alaska’s load factor increased 2.4 percentage points to 69.1 percent compared to the same period in 2003. Alaska’s operating revenue per available seat mile (ASM) increased 4.6 percent, while its operating cost per ASM excluding fuel decreased 1.6 percent. Alaska's pretax loss for the quarter was $53.2 million, compared to $70.6 million in 2003.
Horizon Air's passenger traffic in the first quarter increased 26.1 percent on a 12.3 percent capacity increase. Horizon’s load factor increased by 6.9 percentage points to 65.0 percent compared to the same period in 2003. Horizon’s operating revenue per ASM decreased 0.8 percent, while its operating cost per ASM excluding fuel and impairment charges decreased 8.9 percent. The decrease in Horizon’s revenue per ASM and cost per ASM excluding fuel and impairment charge is largely due to the addition of Horizon’s contract flying for Frontier Airlines. This flying represented 16.2 percent of Horizon’s capacity during the first quarter and 7.4 percent of its passenger revenues. Horizon's pretax loss for the quarter was $10.4 million, compared to a pretax loss of $15.3 million in 2003.
Alaska Air Group had cash and short-term investments at March 31, 2004 of approximately $830 million compared to $812 million at December 31, 2003. The increased balance primarily reflects cash generated from operations and the financing of two Alaska aircraft, partially offset by the purchase of one aircraft, capitalized overhauls and debt repayments. The company’s debt-to-capital ratio, assuming aircraft operating leases are capitalized at seven times annualized rent, was 78 percent during the three months ended March 31, 2004 compared to 77 percent as of December 31, 2003.
[Edited 2004-04-23 16:22:35]