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hiflyeras
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Alaska Record 1st Quarter 2016 Results

Thu Apr 21, 2016 2:34 pm

http://www.prnewswire.com/news-relea...uarter-2016-results-300255109.html

A great quarter for AS and Alaska Air Group:

ROIC of 25%...outstanding!
30 firm orders for E175s...33 options
New AS branding unveiled...QX coming later this year
Intended purchase of VirginAmerica...VX shareholder vote in June.
Record net income of $183m
Holding $1.6b in cash
Increased dividend of $0.275 per share
 
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EA CO AS
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RE: Alaska Record 1st Quarter 2016 Results

Thu Apr 21, 2016 3:41 pm

Congratulations to all my co-workers on another outstanding quarter!   
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
Jetmarc
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RE: Alaska Record 1st Quarter 2016 Results

Thu Apr 21, 2016 3:56 pm

Maybe I missed this in the AS/VX merger thread... the "intended purchase" comment caught my eye... how likely is this to be approved by the AS sharholders? Could the deal fall through since the price is almost double what VX is worth?
"Sucka, I'm gonna send you out on Knuckle Airlines. Fist Class!!" ~ Mr. T
 
jetmatt777
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RE: Alaska Record 1st Quarter 2016 Results

Thu Apr 21, 2016 4:02 pm

Quoting jetmarc (Reply 2):
Maybe I missed this in the AS/VX merger thread... the "intended purchase" comment caught my eye... how likely is this to be approved by the AS sharholders? Could the deal fall through since the price is almost double what VX is worth?

Didn't AS shareholders already give consent? It also has to be approved by the DOJ.
 
hiflyeras
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RE: Alaska Record 1st Quarter 2016 Results

Thu Apr 21, 2016 4:40 pm

VX shareholders are the ones still voting. The VX Board of Directors have already agreed to be acquired by Alaska and the Alaska board has approved the purchase. No vote is taken of Alaska Air Group shareholders. So for the deal to be consummated it must be approved by the VX shareholders and then the DOJ...and it's doubtful that the feds will object due to so few competing routes.
 
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EA CO AS
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RE: Alaska Record 1st Quarter 2016 Results

Thu Apr 21, 2016 5:03 pm

Quoting HiflyerAS (Reply 4):
So for the deal to be consummated it must be approved by the VX shareholders and then the DOJ...and it's doubtful that the feds will object due to so few competing routes.

And most of the VX shareholders are institutional investment groups that have already signed off on the deal.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
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TheRedBaron
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RE: Alaska Record 1st Quarter 2016 Results

Thu Apr 21, 2016 5:12 pm

Sir Richard Posted This on Reddit a few hours ago:

Quote:
I'm so glad you've had a blast these five years and are helping to make Virgin America the best airline in the world. I'm travelling to Seattle in the next couple of weeks on the invitation of Alaska Airlines to talk about the brand. I'm hopeful that sense will prevail, as I think all our travellers and staff do. Please give the whole team my best.

So I guess a lot of stuff needs to be ironed out.

Congrats Alaska, nice to see good results and bold plans for the future.

TRB
The best seat in a Plane is the Jumpseat.
 
MSPNWA
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RE: Alaska Record 1st Quarter 2016 Results

Thu Apr 21, 2016 5:22 pm

Another quarter of significant revenue headwinds. For a primarily domestic airline, it's not a great quarter. Good chance it ends up being the weakest of the majors for revenue change. Their saving grace is costs, particularly fuel, are low. The answer is buying another airline with probability issues?
 
jetmatt777
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RE: Alaska Record 1st Quarter 2016 Results

Thu Apr 21, 2016 5:29 pm

Quoting MSPNWA (Reply 7):
The answer is buying another airline with probability issues?

Eliminate a growing competitor in your main business arena (west coast), strengthen position in SFO and LAX. Use low short term fuel costs to ease digestion of the aquisition. With reduced competition and a strengthened position in the two largest cities on the west coast, a main hub in the 3rd, and a secondary hub in the booming PDX area, they will be well positioned for the future. Loss of competitor will allow revenue growth by reducing fare pressure.
 
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RE: Alaska Record 1st Quarter 2016 Results

Thu Apr 21, 2016 5:54 pm

Quoting TheRedBAron (Reply 6):
I'm travelling to Seattle in the next couple of weeks on the invitation of Alaska Airlines to talk about the brand. I'm hopeful that sense will prevail.


If he's talking about keeping the Virgin America name, he's going to be disappointed.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
MSPNWA
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RE: Alaska Record 1st Quarter 2016 Results

Thu Apr 21, 2016 5:57 pm

Quoting jetmatt777 (Reply 8):
Eliminate a growing competitor in your main business arena (west coast)

But they don't really compete with each other as it is. There's very minimal colluding power in the purchase. So I don't see any significant revenue advantage by combining. The only potential I see is that the combined AS can lower expenses on the VX side and turn it to the black side consistently.
 
HPRamper
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RE: Alaska Record 1st Quarter 2016 Results

Thu Apr 21, 2016 7:39 pm

Quoting MSPNWA (Reply 10):
But they don't really compete with each other as it is. There's very minimal colluding power in the purchase. So I don't see any significant revenue advantage by combining. The only potential I see is that the combined AS can lower expenses on the VX side and turn it to the black side consistently.

Moreso than erasing a competitor, it's a market share grab in the largest markets on the West Coast and a nice snag of some transcon slots. Additionally, VX was never going to threaten AS in the north-south coastal traffic market but B6 certainly would have with an acquisition of VX.
 
toobz
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RE: Alaska Record 1st Quarter 2016 Results

Thu Apr 21, 2016 8:51 pm

I am still not understanding how AS is eliminating a competitor..especially when their routes don't overlap...still seems an awful lot of money for something that isn't hugely obvious. Is this considered a good or awful deal for AS?
 
hiflyeras
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RE: Alaska Record 1st Quarter 2016 Results

Thu Apr 21, 2016 9:10 pm

Quoting toobz (Reply 12):
I am still not understanding how AS is eliminating a competitor..especially when their routes don't overlap...still seems an awful lot of money for something that isn't hugely obvious. Is this considered a good or awful deal for AS?

jetBlue was the other bidder for VX. Had they won, B6 would have had an instant base in LAX and SFO, allowing major west coast expansion. AS was preventing that from happening and paid a pretty penny for it...while at the same time acquiring the assets of a award-winning carrier. A little financial discipline and eliminating redundancies at VX will make AS bigger and stronger not only on the west coast but nationally.
 
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RE: Alaska Record 1st Quarter 2016 Results

Thu Apr 21, 2016 9:27 pm

Quoting MSPNWA (Reply 7):
For a primarily domestic airline, it's not a great quarter

I'm having a hard time finding a cloud in the silver lining of a 23% YOY increase in Q1 revenue. Can you help me understand what you're seeing as so negative that I'm not?

Quoting HiflyerAS (Reply 13):
jetBlue was the other bidder for VX. Had they won, B6 would have had an instant base in LAX and SFO, allowing major west coast expansion. AS was preventing that from happening and paid a pretty penny for it...while at the same time acquiring the assets of a award-winning carrier. A little financial discipline and eliminating redundancies at VX will make AS bigger and stronger not only on the west coast but nationally.

  

This acquisition was about securing a foothold for the next 25-30 years of growth for Alaska Air Group.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
VAM8789
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RE: Alaska Record 1st Quarter 2016 Results

Thu Apr 21, 2016 9:31 pm

What are their most profitable routes?
 
N757ST
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RE: Alaska Record 1st Quarter 2016 Results

Thu Apr 21, 2016 9:36 pm

The irony is that in 5-10 years you might see a Jetblue - Alaska merger. An east coast power house with a west coast powerhouse to great the "big 4th".
 
9w748capt
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RE: Alaska Record 1st Quarter 2016 Results

Thu Apr 21, 2016 9:38 pm

I love all the DL fanboys who look for any reason to diss AS. Way to go AS - now how bout a 2nd OKC-SEA or maybe start OKC-PDX?  
 
MSPNWA
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RE: Alaska Record 1st Quarter 2016 Results

Thu Apr 21, 2016 10:20 pm

Quoting EA CO AS (Reply 14):
I'm having a hard time finding a cloud in the silver lining of a 23% YOY increase in Q1 revenue. Can you help me understand what you're seeing as so negative that I'm not?

The 23% increase was in profit, not in revenue. Their domestic unit revenue change may be the caboose of the industry yet again. Been the same story quarter after quarter. I don't see an easy way out. They better hope fuel stays very low for a while.
 
hiflyeras
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RE: Alaska Record 1st Quarter 2016 Results

Thu Apr 21, 2016 10:37 pm

Quoting MSPNWA (Reply 18):
The 23% increase was in profit, not in revenue. Their domestic unit revenue change may be the caboose of the industry yet again. Been the same story quarter after quarter. I don't see an easy way out. They better hope fuel stays very low for a while.

.

I'd say to go troll some other thread but apparently you have nothing else to do with your time but carry around a dark cloud. You're tiresome.
 
toobz
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RE: Alaska Record 1st Quarter 2016 Results

Thu Apr 21, 2016 10:44 pm

Quoting HiflyerAS (Reply 13):
jetBlue was the other bidder for VX. Had they won, B6 would have had an instant base in LAX and SFO, allowing major west coast expansion. AS was preventing that from happening and paid a pretty penny for it...while at the same time acquiring the assets of a award-winning carrier. A little financial discipline and eliminating redundancies at VX will make AS bigger and stronger not only on the west coast but nationally.

Ok - that makes sense. Thank you for explaining. Best of luck to AS and all employees!! Another good quarter  
 
MSPNWA
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RE: Alaska Record 1st Quarter 2016 Results

Thu Apr 21, 2016 10:50 pm

Quoting HiflyerAS (Reply 19):
I'd say to go troll some other thread but apparently you have nothing else to do with your time but carry around a dark cloud. You're tiresome.

Why would I want to troll the carrier I want to succeed in the SEA war? It's not my fault that AS made major strategic missteps years ago and and is currently paying for it. Just pointing out the underlying facts of Alaska's position.
 
klkla
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RE: Alaska Record 1st Quarter 2016 Results

Thu Apr 21, 2016 11:39 pm

Quoting EA CO AS (Reply 1):
Congratulations to all my co-workers on another outstanding quarter!

One of the reasons often given for Alaska's profitability is their low operating costs compared to rivals... The chief advantage being that they pay their workers less than other airlines.

What type of profit sharing do you guys have? How does it compare to competitors?
 
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EA CO AS
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RE: Alaska Record 1st Quarter 2016 Results

Thu Apr 21, 2016 11:43 pm

Quoting MSPNWA (Reply 18):
Quoting EA CO AS (Reply 14):I'm having a hard time finding a cloud in the silver lining of a 23% YOY increase in Q1 revenue. Can you help me understand what you're seeing as so negative that I'm not?

The 23% increase was in profit, not in revenue.

Pardon me, you're correct - it was a 23% profit increase on an overall revenue increase of 6%. I still fail to see where there's a dark cloud in there, though - profit was up substantially YOY, and trailing 12 months' margin was 25%, up 6 points YOY as well.

Your point - unless I'm mistaken - is that AS has hitched its wagon to SEA, and only SEA, where there has been some revenue pressure. That's not entirely inaccurate, however they've not lost any market share there since the DL incursion began, SEA gate space is about maxed out for the next year, AS has begun expansion in other markets ex-SEA, and of course the VX acquisition is another big step in diversifying their revenue sources.

Quoting MSPNWA (Reply 18):
They better hope fuel stays very low for a while.

Of course anything can change in a heartbeat, but the fundamentals of the energy market support inexpensive fuel for the next 18-24 months at least, during which time you're plugging VX into the existing AS network. It's a case where 2+2 may very well equal 5 once those systems are feeding each other and integrated.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
LAXtoATL
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RE: Alaska Record 1st Quarter 2016 Results

Fri Apr 22, 2016 12:29 am

Quoting EA CO AS (Reply 23):
Pardon me, you're correct - it was a 23% profit increase on an overall revenue increase of 6%. I still fail to see where there's a dark cloud in there, though - profit was up substantially YOY, and trailing 12 months' margin was 25%, up 6 points YOY as well.

As much as I hate to agree with anything MSPNWA says, he has a point.
While AS profits were up about 30M YoY, fuel expense was done about about 60M YoY. That means ex-fuel costs are by far out growing revenue and if fuel was constant YoY they would have posted a hefty loss! This phenomenon is not unique to just AS, most carriers profits are very closely tied to fuel expenses savings, however most would have broke even or posted a modest profit if fuel expenses were flat and AS would have been deep in the red under this scenario. With fuel expected to move off of lows and to increase about 40-50% this year, while still historically cheap, that will create a real headache for all airlines but disproportionately so for those relying on fuel savings for all of their profits as well as those that have been adding capacity with marginal profitability; I think Alaska falls into both categories.

[Edited 2016-04-21 17:56:54]
 
tortugamon
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RE: Alaska Record 1st Quarter 2016 Results

Fri Apr 22, 2016 12:42 am

Quoting LAXtoATL (Reply 24):
With fuel expected to move off of lows and to increase about 40-50% this year

Would like to read any information you have on this.

tortugamon
 
LAXtoATL
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RE: Alaska Record 1st Quarter 2016 Results

Fri Apr 22, 2016 1:03 am

Quoting tortugamon (Reply 25):

Would like to read any information you have on

Crude oil is expected to hit $40-50 in the next 2-3 months. Considering early this year it hovered at 30, even below for awhile - that would be about 40-50% increase from Q1 prices. While I know this doesn't translate dollar for dollar to jet fuel prices, they do move in sympathy. You can find any number of articles in the general or financial media regarding the expected increase and subsequent stabilization of oil in the 40-50 range.
 
b6sea
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RE: Alaska Record 1st Quarter 2016 Results

Fri Apr 22, 2016 1:04 am

The fact that AS has been so outstandingly successful in the Seattle market with DL sitting right on top of them, dumping capacity on the market, should not be overlooked either. Though it's easy to find weaknesses in any airline's business plan, especially relating to fuel, I would say Alaska has not only survived, but thrived over the past several years.

The VX acquisition, which surprised many here, has to be looked at in terms of both what does AS gain from the acquisition, and what do they lose by not going through with it (or with someone else picking up VX). The amount of ground they stand to lose by not buying VX seems substantial and the potential to expand to the two largest markets on the west coast in a fairly substantial way all at once is not an opportunity that presents itself often.

I have no doubt AS leadership will listen to Richard Branson and will take in everything he has to say. Whether or not they will appreciate the condescending tone he has toward AS is another story, though I know they are used to people, media, and others misunderstanding their brand and business model quite often. and hopefully they will demonstrate to him the values at the core of the Alaska Airlines brand, which is not unlike the core of VX's brand; namely high quality service. I think the two are far more compatible than many people give them credit for and as long as the merger is managed properly, I think it will be a success.

But, that said, I've been wrong before and I will be again, so who knows. Speculation is fun, but that's all it is.
 
tortugamon
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RE: Alaska Record 1st Quarter 2016 Results

Fri Apr 22, 2016 1:31 am

Quoting LAXtoATL (Reply 26):
You can find any number of articles in the general or financial media regarding the expected increase and subsequent stabilization of oil in the 40-50 range.

OK. I follow this pretty closely and I don't see reputable people making predictions like that and just wanted to see if you had better info. I presume not.

OPEC not reaching an agreement doesn't bode well for price increases above Q1 rates.

If I am an airline and such conviction exists then I would be increasing by hedging not removing them like most airlines seem to be doing.

tortugamon
 
United1
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RE: Alaska Record 1st Quarter 2016 Results

Fri Apr 22, 2016 1:41 am

Quoting tortugamon (Reply 28):
Quoting LAXtoATL (Reply 26):
You can find any number of articles in the general or financial media regarding the expected increase and subsequent stabilization of oil in the 40-50 range.

OK. I follow this pretty closely and I don't see reputable people making predictions like that and just wanted to see if you had better info. I presume not.

Just to chime in here as well...while no one can say for sure that oil won't spike back up there is nothing I have seen that shows oil stabilising at 40-50 a barrel anytime soon. I have seen a few forward curve projections that show oil stabilising at $50 but those are a few years out.
I know the voices in my head aren't real but sometimes their ideas are just awesome!!!
 
LAXtoATL
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RE: Alaska Record 1st Quarter 2016 Results

Fri Apr 22, 2016 1:48 am

Quoting tortugamon (Reply 28):
If I am an airline and such conviction exists then I would be increasing by hedging not removing them like most airlines seem to be doing

This is curious to me as well. But I was also surprised as they kept hedges in place so long as oil was obviously headed down (I know some are placed months and years in advance but some of them were initiated during the decline)

Quoting United1 (Reply 29):
Just to chime in here as well...while no one can say for sure that oil won't spike back up there is nothing I have seen that shows oil stabilising at 40-50 a barrel anytime soon. I have seen a few forward curve projections that show oil stabilising at $50 but those are a few years out.

Based on what both of your are saying, I will have to read up more on oil. Maybe I am misremembering what I have read over the past couple months.

Personally, I would be shocked to see oil remain at these levels through the year as too many parties have a vested interest in seeing it rise at least moderately.
 
dlflynhayn
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RE: Alaska Record 1st Quarter 2016 Results

Fri Apr 22, 2016 1:49 am

Quoting 9w748capt (Reply 17):

I love all the DL fanboys who look for any reason to diss AS

Can you please point one out cause i don't see one on here...MSPNWA may not be my favorite guy on here but he/she does have some dark cloud facts though ..And he/she also is not a Delta fan not even close haha.Anyways Congrads to AS a profit is a profit bottom line..
 
MaverickM11
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RE: Alaska Record 1st Quarter 2016 Results

Fri Apr 22, 2016 1:57 am

Quoting TheRedBAron (Reply 6):
Sir Richard Posted This on Reddit a few hours ago:

Quote:
I'm so glad you've had a blast these five years and are helping to make Virgin America the best airline in the world. I'm travelling to Seattle in the next couple of weeks on the invitation of Alaska Airlines to talk about the brand. I'm hopeful that sense will prevail, as I think all our travellers and staff do. Please give the whole team my best.

Is Branson going to Seattle to learn how to run a crazy profitable airline with an incredibly loyal following?   
I don't take responsibility at all
 
United1
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RE: Alaska Record 1st Quarter 2016 Results

Fri Apr 22, 2016 2:36 am

Quoting LAXtoATL (Reply 30):
Personally, I would be shocked to see oil remain at these levels through the year as too many parties have a vested interest in seeing it rise at least moderately.

Part of the issues are simply lots of egos are at play....Saudis vs US vs Iran vs Opec vs Russia...combine that with the slowing Chinese economy and the issues in Brazil and you have a perfect storm for cheap oil. A lot of people would like to see oil go higher but keep in mind as it does some of the production here in the US that isn't profitable at current prices becomes viable again....which means you guessed it more oil.
I know the voices in my head aren't real but sometimes their ideas are just awesome!!!
 
tortugamon
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RE: Alaska Record 1st Quarter 2016 Results

Fri Apr 22, 2016 3:25 am

Quoting LAXtoATL (Reply 30):
This is curious to me as well. But I was also surprised as they kept hedges in place so long as oil was obviously headed down (I know some are placed months and years in advance but some of them were initiated during the decline)

I think that is a good indication that no one can predict oil prices well and we really shouldn't try to listen to those who think they can. T Boone Pickens said Goldman was insane for predicting $twenty oil and it happened and that is an intelligent oil man.

Quoting LAXtoATL (Reply 30):
Personally, I would be shocked to see oil remain at these levels through the year as too many parties have a vested interest in seeing it rise at least moderately.

Well it already is above $40 so it is in the range that you speculated. I just don't think intelligent people predict what it will do for a long period like the rest of the year. If people really knew that then there are billions to be made not telling the public.

tortugamon
 
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TheRedBaron
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RE: Alaska Record 1st Quarter 2016 Results

Fri Apr 22, 2016 4:07 am

Quoting EA CO AS (Reply 9):
If he's talking about keeping the Virgin America name, he's going to be disappointed.

Agree, and he might be surprised on Alaska Group goals and philosophy ...

TRB
The best seat in a Plane is the Jumpseat.
 
LAXtoATL
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RE: Alaska Record 1st Quarter 2016 Results

Fri Apr 22, 2016 4:19 am

Quoting United1 (Reply 33):
Part of the issues are simply lots of egos are at play....Saudis vs US vs Iran vs Opec vs Russia...combine that with the slowing Chinese economy and the issues in Brazil and you have a perfect storm for cheap oil. A lot of people would like to see oil go higher but keep in mind as it does some of the production here in the US that isn't profitable at current prices becomes viable again....which means you guessed it more oil.

I understand the egos and politics involved. But everybody is suffering here and it is everybody's interest to get the price of oil back up (at least modestly). The wildcard is Iran who has recently just been removed from sanctions, so any price sounds good to them.

One of big reasons the price of oil is so low is that the US didn't stop producing oil at these levels (very little). So, US production doesn't have much room to climb. We got this low because Saudi wanted to force US production out of the market, but the US proved to be far more resilient than they expected.
 
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RWA380
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RE: Alaska Record 1st Quarter 2016 Results

Fri Apr 22, 2016 4:36 am

Quoting EA CO AS (Reply 1):
Congratulations to all my co-workers on another outstanding quarter!

Kudos to the staff that I meet when I travel & the entire staff at AS, I have one special friend up in ANC who has just marked her tenth anniversary, WTG!

Quoting toobz (Reply 12):
I am still not understanding how AS is eliminating a competitor..

They aren't, they are building a formidable West Coast carrier with flights in key West-East markets. The enhanced AS will be a force to be reckoned with on the West Coast & before anyone starts up with Bay Area -LA Area flights, I am excluding this one obvious market to WN. Although AS will be back in the game again.

Quoting toobz (Reply 12):
especially when their routes don't overlap

SFO-SEA & PDX that is it. But AS & VX compete for PDX-DCA or SEA-AUS passengers.

Quoting HiflyerAS (Reply 13):
AS was preventing that from happening and paid a pretty penny for it...while at the same time acquiring the assets of a award-winning carrier. A little financial discipline and eliminating redundancies at VX will make AS bigger and stronger not only on the west coast but nationally

This will be an easy pill to swallow, AS isn't going to have a bunch of redundancies to eliminate, but as the Airbus go off lease & get replaced by Boeing that'll obviously cost a few bucks.

Quoting EA CO AS (Reply 14):
This acquisition was about securing a foothold for the next 25-30 years of growth for Alaska Air Group.


I agree 100%, a great example of planned growth for AS, they have been mulling VX since last fall, there is nothing done quick trigger, which is why the carrier continues to exceed expectations.

Quoting 9w748capt (Reply 17):
or maybe start OKC-PDX?

Not since 1968 has anyone flown this route, CO entered the SEA & PDX markets with n/s service from both OKC & ICT.

Quoting klkla (Reply 22):
The chief advantage being that they pay their workers less than other airlines

Some of the happiest & most enthusiastic employee's in the air are under paid? Not sure you can equate money to happiness. Happiness is far more important from a passenger standpoint. Now NK flight attendants that's underpaid & overworked!
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United1
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RE: Alaska Record 1st Quarter 2016 Results

Fri Apr 22, 2016 4:46 am

Quoting LAXtoATL (Reply 36):
But everybody is suffering here and it is everybody's interest to get the price of oil back up (at least modestly). The wildcard is Iran who has recently just been removed from sanctions, so any price sounds good to them.

It's in everyones interest to get the price back up (a bit) but its also in everyones interest to ensure they are not the ones to blink first...kind of the classic chicken and the egg argument.

Quoting LAXtoATL (Reply 36):
So, US production doesn't have much room to climb.

Actually US oil has a ton of room to climb but not at these prices...there is quite a lot that is technologically recoverable at this point simply not profitably. As the technology gets better or the price goes higher more can be pumped out...one of the biggest issues is not one of production but of refineries.

Quoting LAXtoATL (Reply 36):
We got this low because Saudi wanted to force US production out of the market, but the US proved to be far more resilient than they expected.

That's part of the equation but part of it is simply that the Saudis can't stop pumping....it's not quite as simple as turning on and off a tap.
I know the voices in my head aren't real but sometimes their ideas are just awesome!!!
 
ASFlyer
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RE: Alaska Record 1st Quarter 2016 Results

Fri Apr 22, 2016 4:53 am

Quoting RWA380 (Reply 37):
but as the Airbus go off lease & get replaced by Boeing that'll obviously cost a few bucks.

I'm just wondering where this comes from? Management hasn't said they are getting rid of the Airbus, they've said they plan on studying them to see if there's an advantage to keeping them. My personal opinion is that once they realize the advantages of the A321 neo over any Boeing narrow body product, they'll decide that a dual fleet isn't necessarily a bad thing. Just because they've gone to a Boeing only fleet doesn't mean they'll continue down that path. They have experience operating more than one aircraft type and the products have improved vastly since their last experience with this. Going to an all Boeing fleet is not a foregone conclusion.

Quoting klkla (Reply 22):
One of the reasons often given for Alaska's profitability is their low operating costs compared to rivals... The chief advantage being that they pay their workers less than other airlines.

I can't speak for all employee groups but the AS FA's are paid very well and definitely not less than a majority of airlines. In addition, they realize a number of contractual benefits that make them some of the more well compensated Flight Attendants in the industry.
 
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EA CO AS
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RE: Alaska Record 1st Quarter 2016 Results

Fri Apr 22, 2016 5:46 am

Quoting ASFlyer (Reply 39):
My personal opinion is that once they realize the advantages of the A321 neo over any Boeing narrow body product, they'll decide that a dual fleet isn't necessarily a bad thing.

  

This is my guess as well; I'd imagine that the A321NEO will likely become the long-haul workhorse of the fleet, and the firm order from Airbus will see quite a few extra frames added down the line.

Just my $0.02 worth, of course - there's a lot to do before anything is actually decided upon.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
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RWA380
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RE: Alaska Record 1st Quarter 2016 Results

Fri Apr 22, 2016 6:16 am

Quoting ASFlyer (Reply 39):
I'm just wondering where this comes from? Management hasn't said they are getting rid of the Airbus, they've said they plan on studying them to see if there's an advantage to keeping them.

This was from someone in the company & not meant to be gospel, but it's how things are going as of now. AS will certainly end up flying them in the short term, but I believe the AS relationship with Boeing is very solid & will continue to remain so.
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yeelep
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RE: Alaska Record 1st Quarter 2016 Results

Fri Apr 22, 2016 8:06 am

Quoting LAXtoATL (Reply 24):
While AS profits were up about 30M YoY, fuel expense was done about about 60M YoY. That means ex-fuel costs are by far out growing revenue and if fuel was constant YoY they would have posted a hefty loss!

So, you take a net income of 183M this quarter and subtract the YoY 60M fuel savings you get 123M income. How is that a hefty loss, in my world that would be a profit.
 
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TVNWZ
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RE: Alaska Record 1st Quarter 2016 Results

Fri Apr 22, 2016 1:39 pm

Quoting LAXtoATL (Reply 36):
I understand the egos and politics involved. But everybody is suffering here and it is everybody's interest to get the price of oil back up (at least modestly).

Not everyone. I am very happy with oil being low. It is generating record profits for the companies I am involved in. Lower oil/gas prices lower the cost of business or increase profits throughout the economy. It pumps spending which is always good. Now, some businesses may suffer and the commodities gamblers may suffer, but low oil is generally good for the cost of doing business.
 
LAXtoATL
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RE: Alaska Record 1st Quarter 2016 Results

Fri Apr 22, 2016 1:41 pm

Quoting yeelep (Reply 42):
So, you take a net income of 183M this quarter and subtract the YoY 60M fuel savings you get 123M income. How is that a hefty loss, in my world that would be a profit.

No.
Analysts look at YoY comparisons to see how the carrier is doing relative to same period a year ago. Basically are they in better shape, the same, or worse?
What you are doing is mixing your numbers (total income vs just the change in fuel costs instead of looking at the change in both), I was just looking at YoY (the change). Net income improved by about $30M from Q1 last year (it was about 150M vs 183M this year), but fuel expense was down about $60M from Q1 last year.
Now if you want to analyze the performance excluding fuel (which is a common measure in the industry), you will find that YoY AS results are actually down about 3OM.
It doesn't change their net income for the quarter, it is what it is. But if you are examining if they are performing better than they were a year ago? Excluding fuel (which is out of their control) they are doing much worse, net income is down about 20%.

Edit:
On the earnings call AS reported YoY...
Revenues increased $78M
Non-fuel expenses increased $94M
Fuel expenses decreased $66M

[Edited 2016-04-22 06:49:00]
 
winginit
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RE: Alaska Record 1st Quarter 2016 Results

Fri Apr 22, 2016 1:57 pm

Some staggering PRASM declines that are comparable to what the legacy carriers are reporting, which is concerning given the US3 are explaining comparable declines away as a DPIJ component - something that Alaska can only partially claim.

 
LAXtoATL
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RE: Alaska Record 1st Quarter 2016 Results

Fri Apr 22, 2016 1:59 pm

Quoting TVNWZ (Reply 43):
Not everyone. I am very happy with oil being low. It is generating record profits for the companies I am involved in. Lower oil/gas prices lower the cost of business or increase profits throughout the economy. It pumps spending which is always good. Now, some businesses may suffer and the commodities gamblers may suffer, but low oil is generally good for the cost of doing business.

I thought the context made it obvious... the 'everyone' is referring to the countries / companies that control oil production.
Of course most everyone else (including myself) is happy low fuel prices.

On another note, depending what airline you are involved in this ultra cheap oil is a double edged sword and not as good you think. The LCC and really the ULCC love oil down here, the larger carriers not so much. Oil has reduced the barriers to entry and capacity is increasing driving down unit revenue. This is why the larger carriers in the US all reported PRASM and RASM declines in Q1 and are forecasting even lower numbers in Q2 (a trend that has been evident for about a year). Obviously they don't want to see oil skyrocket, but an increase that would render some of the new marginal capacity as unprofitable would help move the RASM numbers back in the right direction.
 
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b727fa
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RE: Alaska Record 1st Quarter 2016 Results

Fri Apr 22, 2016 2:07 pm

Well done, AS! Good quarter and much congratulations to you all!
My comments/opinions are my own and are not to be construed as the opinion(s) of my employer.
 
BoeingGuy
Posts: 6313
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RE: Alaska Record 1st Quarter 2016 Results

Fri Apr 22, 2016 4:40 pm

Quoting MSPNWA (Reply 21):
It's not my fault that AS made major strategic missteps years ago and and is currently paying for it.

What missteps are those? Please elaborate? I always thought AS was a well managed successful company. Please enlighten us on their missteps.
 
hiflyeras
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RE: Alaska Record 1st Quarter 2016 Results

Fri Apr 22, 2016 5:35 pm

Quoting BoeingGuy (Reply 48):
What missteps are those? Please elaborate? I always thought AS was a well managed successful company. Please enlighten us on their missteps.

AS is one of the most successful airlines in the world...and it's not just the opinion of armchair airline CEO's but Air Transport World, Wall Street Journal, JD Power, etc.

https://www.alaskaair.com/content/about-us/newsroom/alaska-awards.aspx

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