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Alaska Air Group 2006 Earnings - It's A Record!  
User currently offlineEA CO AS From United States of America, joined Nov 2001, 13255 posts, RR: 62
Posted (7 years 2 months 3 weeks 6 days 6 hours ago) and read 2443 times:
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One-time charges aside, this represents the best year in the history of Alaska Air Group!  champagne 


SEATTLE — Alaska Air Group, Inc. (NYSE:ALK) today reported a full year net loss of $52.6 million, or $1.39 per share, compared to a net loss of $5.9 million, or $0.01 per diluted share, in 2005. The 2006 results include charges related to the transition to an all-Boeing 737 fleet at Alaska Airlines and for voluntary severance programs related to new labor contracts, as well as mark-to-market fuel hedging adjustments. The 2005 results similarly include mark-to-market fuel hedge adjustments, voluntary severance program charges, a refund of Mexico navigation fees and the cumulative effect of a change in the company’s maintenance accounting policy. Excluding the impact of these items, 2006 net income would have been $137.7 million, or $3.45 per diluted share, compared to $55.0 million, or $1.78 per share in 2005.

The company reported a fourth quarter net loss of $11.6 million, or $0.29 per share, compared to a net loss of $33.0 million, or $1.15 per share, in the fourth quarter of 2005. Similar to the items noted for the full year, both the 2006 and 2005 quarterly results include mark-to-market fuel hedge accounting adjustments and restructuring-related items. Excluding the impact of these items, the company would have reported a fourth quarter net loss of
$3.4 million, or $0.08 per share in 2006, compared to net income of $0.6 million, or $0.02 per share, in the fourth quarter of 2005.

“While unit revenue growth slowed somewhat during the fourth quarter, our full year adjusted earnings show steady improvement over the last five years,” said Bill Ayer, the company’s chairman and chief executive officer. “This positive trend reflects the commitment of employees at Alaska and Horizon to achieve our customer, operational and financial goals. Alaska’s transition by the end of 2008 to an all-737 fleet will further our efforts to reduce costs while delivering a compelling customer value.”

Because they achieved a number of financial and operational goals, Air Group employees have earned $36.8 million of incentive pay. This is the highest incentive payout in the company’s history. In addition, the marked improvement in operating cash flows allowed the company to contribute nearly $122 million to its defined benefit pension plans in 2006, bringing the funded percentage to nearly 80 percent based on the projected benefit obligation of the plans.

Alaska Airlines’ passenger traffic in the fourth quarter increased 3.4 percent on a capacity increase of 3.6 percent. Alaska’s load factor decreased 0.2 percentage points to 73.7 percent, compared to the same period in 2005. Alaska’s operating revenue per available seat mile (ASM) increased 3.9 percent, and its operating costs per ASM excluding fuel and adjustments related to restructuring activities increased 2.0 percent. Alaska’s pretax loss for the quarter was $12.1 million, compared to a pretax loss of $46.3 million in 2005.

Excluding the restructuring adjustments and fuel-hedging items referenced above, Alaska’s pretax loss was $1.9 million for the quarter, compared to pre-tax income of $0.5 million in the fourth quarter of 2005.

Horizon Air’s passenger traffic in the fourth quarter increased 4.3 percent on a 5.2 percent capacity increase. Horizon’s load factor decreased by 0.7 percentage points to 73.0 percent. Horizon’s operating revenue per ASM increased 7.1 percent, and its operating costs per ASM excluding fuel increased 6.8 percent. Horizon’s pretax loss for the quarter was $3.5 million, compared to a pretax loss of $6.6 million in 2005. Excluding the fuel-hedging adjustments referenced above, Horizon’s pretax loss was $0.5 million for the quarter, compared to pretax income of $0.4 million in the fourth quarter of 2005.

Alaska Air Group had cash and short-term investments at Dec. 31, 2006, of approximately $1.0 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, improved to 72 percent as of Dec. 31, 2006.

A summary of financial and statistical data for Alaska Airlines and Horizon Air, as well as a reconciliation of the reported non-GAAP financial measures, can be found on pages 6 through 10.

A conference call regarding the fourth quarter 2006 results will be simulcast via the Internet at 8:30 a.m. Pacific time on Jan. 25, 2007. It can be accessed through the company’s Web site at alaskaair.com/investors. For those unable to listen to the live broadcast, a replay will be available after the conclusion of the call at alaskaair.com/investors.



"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan
15 replies: All unread, jump to last
 
User currently offlineAirframeAS From United States of America, joined Feb 2004, 14150 posts, RR: 25
Reply 1, posted (7 years 2 months 3 weeks 6 days 6 hours ago) and read 2436 times:

Looks like phasing out the M82/3's was a good idea... Congrats to AS! Wished I was still there celebrating with you guys!

Now lets see if AS will get the 739ER, that would be nice.



A Safe Flight Begins With Quality Maintenance On The Ground.
User currently offlineAA737-823 From United States of America, joined Mar 2000, 5639 posts, RR: 11
Reply 2, posted (7 years 2 months 3 weeks 6 days 4 hours ago) and read 2344 times:

Quoting EA CO AS (Thread starter):
loss of $52.6 million

They lost 52 million dollars, and you're claiming this is their best year ever???

What 'could have been' ceases to matter in a bank account that only cares about a balance.

I would hate to see them on a 'bad' year...

How is this good news?

[Edited 2007-01-25 19:09:25] for clarity

[Edited 2007-01-25 19:10:13]

User currently offlineEA CO AS From United States of America, joined Nov 2001, 13255 posts, RR: 62
Reply 3, posted (7 years 2 months 3 weeks 6 days 3 hours ago) and read 2294 times:
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Quoting AA737-823 (Reply 2):
They lost 52 million dollars, and you're claiming this is their best year ever???

After one-time charges such as retiring the MD-80 and 737-200C fleets, paying for a huge employee voluntary severance package, yes. You have to look at what the earnings were BEFORE those one-time events, as it gives investors and analysts a more accurate picture of a company's real earnings power.



"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan
User currently offlineBurnsie28 From United States of America, joined Aug 2004, 7504 posts, RR: 8
Reply 4, posted (7 years 2 months 3 weeks 6 days 3 hours ago) and read 2256 times:

They still lost money, and as of Jan 8 AS was still flying MD-80's I saw one come in and operate an AS flight to Denver.


"Some People Just Know How To Fly"- Best slogan ever, RIP NW 1926-2009
User currently offlineEA CO AS From United States of America, joined Nov 2001, 13255 posts, RR: 62
Reply 5, posted (7 years 2 months 3 weeks 6 days 3 hours ago) and read 2225 times:
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Quoting Burnsie28 (Reply 4):
They still lost money,

That's like saying you didn't make any money this year because you bought a new car and had to replace the roof on your house.

Quoting Burnsie28 (Reply 4):
as of Jan 8 AS was still flying MD-80's

The last one will leave the fleet in 2008.

Check out the video of CEO Bill Ayer:

http://www.alaskasworld.com/NEWS/2007/01/Bill_4Q06.wmv

[Edited 2007-01-25 20:31:33]


"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan
User currently offlineAA737-823 From United States of America, joined Mar 2000, 5639 posts, RR: 11
Reply 6, posted (7 years 2 months 3 weeks 6 days 2 hours ago) and read 2196 times:

Quoting EA CO AS (Reply 5):
That's like saying you didn't make any money this year because you bought a new car and had to replace the roof on your house.

If I made $20 this year, and spent $15 on a new car, and spent $25 on my roof replacement, then I LOST MONEY.

Any way you look at it, out-go was bigger than in-come.

Don't get me wrong, AS is a decent airline. But releases like this smell a lot like kool-aid to me.


User currently offlineLuisca From , joined Dec 1969, posts, RR:
Reply 7, posted (7 years 2 months 3 weeks 6 days 2 hours ago) and read 2170 times:

Quoting AA737-823 (Reply 2):
They lost 52 million dollars, and you're claiming this is their best year ever???

What 'could have been' ceases to matter in a bank account that only cares about a balance.

I would hate to see them on a 'bad' year...

How is this good news?



Quoting AA737-823 (Reply 6):

If I made $20 this year, and spent $15 on a new car, and spent $25 on my roof replacement, then I LOST MONEY.

Any way you look at it, out-go was bigger than in-come.

Don't get me wrong, AS is a decent airline. But releases like this smell a lot like kool-aid to me.


It is not as easy as that, some of these charges like hedging mark to market adjustment, changes in accounting systems, are all Book only transactions, that can add up to millions.

Like you stated, what matters in the end is the money in the bank, so you cant look at net income (loss), you have to look at a statement of cash flows and see if there was a net increase in cash flow for the year, was this related to increase in debt, and a whole lot of other stuff to determine if a company made money or not. For 2006, Alaska put money in the bank, simple. Net income can not be looked at without evaluating the other circumstances.

This reminds me of the case of Vodafone that from one day to another "lost" 9 billion pounds but had actually had a profit of 6 billion, the reason was a charge for changes in accounting systems. Did Vodafone have less money in the bank? the answer is no. Also when UAL exited Bankruptcy it posted a loss of 23 billion, obviously no company can loose that amount of money and stay alive No. Net income is not the absolute way of knowing if a company made money.

[Edited 2007-01-25 21:05:10]

User currently offlineAsqx From United States of America, joined Jun 1999, 602 posts, RR: 0
Reply 8, posted (7 years 2 months 3 weeks 6 days 2 hours ago) and read 2144 times:

Quoting AA737-823 (Reply 6):
If I made $20 this year, and spent $15 on a new car, and spent $25 on my roof replacement, then I LOST MONEY.

Any way you look at it, out-go was bigger than in-come.

Don't get me wrong, AS is a decent airline. But releases like this smell a lot like kool-aid to me.

Actually, a better analogy would be that you made $20, spent $15 on a new car, and your house dropped in value $25 because the neighbors put on a new roof which dropped the value of your house. You actually still have the left over $5 in your hand, you just have less asset value, since no one came and took any cash away to decrease your house's value.

As much as I take anything issued by the folks over at Angle Lake with a large grain of salt, I have to admit that they have gotten at least some things right over the last few years. Then again, the one thing I would really like to see is a year without enough "one time items" to make a good year look abysmal.


User currently offlineElmoTheHobo From United States of America, joined Aug 2006, 1534 posts, RR: 1
Reply 9, posted (7 years 2 months 3 weeks 6 days 2 hours ago) and read 2126 times:

Uhh a loss is a loss.

Yes, next year will be better, but right here & right now, they lost 52 million dollars.


User currently offlineSearpqx From Netherlands, joined Jun 2000, 4343 posts, RR: 11
Reply 10, posted (7 years 2 months 3 weeks 6 days 2 hours ago) and read 2092 times:

Quoting ElmoTheHobo (Reply 9):
Uhh a loss is a loss.

Uhh, no it isn't. Read the two very good explanations above.

Quoting Asqx (Reply 8):
the one thing I would really like to see is a year without enough "one time items" to make a good year look abysmal

As a layman, I agree, but as an analyst I'd say you'll never see it. Those 'one time items' have a significant impact on tax liability, etc., and no matter how good a year you have, you're going to look for as many of those as possible.



"The two most common elements in the universe are Hydrogen and stupidity"
User currently offlineAirframeAS From United States of America, joined Feb 2004, 14150 posts, RR: 25
Reply 11, posted (7 years 2 months 3 weeks 6 days 1 hour ago) and read 2076 times:

Quoting EA CO AS (Reply 5):
The last one will leave the fleet in 2008.

 checkmark 

Quoting Searpqx (Reply 10):
Uhh, no it isn't. Read the two very good explanations above.

Agreed. These will help AS in the future. Paying for this stuff now rather than later helps ALOT.



A Safe Flight Begins With Quality Maintenance On The Ground.
User currently offlineAS739X From United States of America, joined Apr 2003, 6004 posts, RR: 24
Reply 12, posted (7 years 2 months 3 weeks 5 days 19 hours ago) and read 1909 times:

Clearly some people here have not taken business class 101 (AA737). This is huge for Alaska. This was some good news !

ASLAX



"Some pilots avoid storm cells and some play connect the dots!"
User currently onlinePlanesNTrains From United States of America, joined Feb 2005, 5283 posts, RR: 29
Reply 13, posted (7 years 2 months 3 weeks 5 days 18 hours ago) and read 1858 times:

Quoting AA737-823 (Reply 6):
But releases like this smell a lot like kool-aid to me.

If it was released for the benefit of the employees or the traveling public exclusively, I might agree. But they aren't - they're for the investors (and others). They aren't kool-aid, because the investment community will understand the picture that is painted by the numbers, regardless of the spin put on by Alaska. In the end, if those folks say it's positive (and if, in this case, the cash and equivalents grew during the period), then I'd say it ain't kool-aid.

-Dave



Totes my goats!
User currently offlineWesternA318 From United States of America, joined Oct 2004, 5647 posts, RR: 24
Reply 14, posted (7 years 2 months 3 weeks 5 days 17 hours ago) and read 1847 times:

Quoting AA737-823 (Reply 6):
But releases like this smell a lot like kool-aid to me

But this isnt WN or B6 or F9 or DL we're talking about....  flamed 



Next trip: SLC-LAX-JFK-LAX-SLC on AA, gotta say goodbye to my beloved 762!
User currently offlineDCrawley From United States of America, joined Jun 2005, 371 posts, RR: 1
Reply 15, posted (7 years 2 months 3 weeks 5 days 17 hours ago) and read 1832 times:

Quoting Asqx (Reply 8):
As much as I take anything issued by the folks over at Angle Lake with a large grain of salt

I love the Angle Lake part of your statement! Thanks for a good laugh to end the night!  Smile



"Weather at our destination is 50 degrees with some broken clouds, but they'll try to have them fixed before we arrive."
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