Pretty grim results....
FOR IMMEDIATE RELEASE January 30, 2003
ALASKA AIR GROUP REPORTS FOURTH QUARTER RESULTS
SEATTLE — Alaska Air Group, Inc. (NYSE:ALK) today reported a fourth quarter net loss of $43.1 million, or $1.62 per share, compared with a net loss of $37.4 million, or $1.41 per share, during the corresponding quarter in 2001. The company’s fourth quarter results for 2001 include pre-tax compensation of $52.3 million that was received pursuant to the Air Transportation Safety and System Stabilization Act and a $10.2 million special charge related to the retirement of Horizon’s F-28 fleet. Excluding these items, the company lost $63.9 million or $2.41 per share in the fourth quarter of 2001.
For the full year, Alaska Air Group lost $118.6 million or $4.47 per share in 2002. Included in the company’s 2002 full year results is a $51.4 million charge related to the write off of goodwill in connection with the adoption of Statement of Financial Accounting Standards No. 142. Excluding this charge, the company lost $67.2 million or $2.53 per share versus a loss of $43.4 million or $1.64 per share in 2001. Due to the September 11 terrorist acts, year over year comparisons of both financial and operational information are significantly impacted.
“As expected, it was a difficult quarter, ending yet another difficult year for both the industry and Alaska Air Group,” said John F. Kelly, chairman and chief executive officer. “And yet as difficult as it was, we continued to outperform most of the industry by maintaining our focus on delivering an award-winning product, by implementing further cost management initiatives, and by strengthening our network through the re-deployment of a portion of our fleet to strategic new markets. We expect that further changes in our industry will occur, but feel that we’re well positioned to deal with the challenges and opportunities that lie ahead.”
Operationally, Alaska Airlines' passenger traffic in the fourth quarter increased 15.6 percent on a capacity increase of 15.5 percent. Load factor increased 0.1 points to 66.5 percent. The airline's operating revenue per available seat mile (ASM) decreased 3.4 percent, while its operating cost per ASM excluding fuel decreased 8.9 percent. Alaska's pretax loss was $58.6 million compared to a pretax loss of $18.8 million a year earlier. Alaska’s 2001 pretax income includes $52.9 million of U.S. government compensation.
Horizon Air's passenger traffic in the fourth quarter increased 28.7 percent on a 33.3 percent capacity increase. Load factor decreased by 2.2 points to 61.1 percent. The airline's operating revenue per ASM decreased 8.8 percent, while its operating cost per ASM excluding special charge decreased 24.6 percent. Excluding fuel and special charge, cost per ASM decreased 26.8 percent. Horizon's pretax loss was $5.8 million, compared to a pretax loss of $35.0 million a year earlier. Horizon’s 2001 pretax income includes $0.6 million of U.S. government compensation.
Alaska Air Group continues to have a strong cash position at December 31, 2002 with approximately $636 million in cash and marketable securities. The company’s debt-to-capital ratio, assuming aircraft operating leases are capitalized at seven times annualized rent, was 77 percent.
During the quarter, the company also recorded a non-cash charge to equity of $87.2 million (net of income taxes of $52.5 million) relating to the defined benefit pension plans that the company sponsors for eligible employees. This change is the result of an unfunded accrued benefit obligation resulting from lower than expected return on plan assets.
A conference call regarding year-end and fourth quarter results will be simulcast via the Internet at 9:00 a.m. Pacific Standard Time. It may be accessed through the company’s website at www.alaskaair.com.