Alaska Air Group Reports First Quarter Results.Business Editors SEATTLE--(BUSINESS WIRE)--April 19, 2001 Alaska Air Group, Inc. (NYSE:ALK) today reported a first quarter loss of $33.1 million, or $1.25 per share, compared with a loss of $9.2 million, or $0.35 per share, for last year's first quarter. Last year's loss is before the cumulative effect of a change in accounting for the sale of frequent flyer miles. Operating revenues for the quarter were $516 million, a 5.4 percent increase, while operating expenses were $566 million, up 11.7 percent. The operating loss for the quarter was $49.5 million, compared with an operating loss of $16.6 million a year earlier. "These results are disappointing, but not unexpected," said John F. Kelly, chairman and chief executive officer of Alaska Air Group, Inc. "At Alaska Airlines, we did see year-over-year improvement in both traffic and yield, which was certainly gratifying given the current economic environment. But on the other hand, we continued to be challenged by high fuel prices, as well as by higher operating costs that we haven't been able to offset by growth to this point." "Horizon Air had a particularly difficult quarter due in large part to the costs associated with their transition into new aircraft. They also saw some decline in business travel. Thankfully, the bulk of their transition costs are now behind them, although it will take some time before they see the full benefits of their new aircraft." Alaska Airlines' passenger traffic increased 2.9 percent on a capacity increase of 4.6 percent. Its load factor fell 1.1 points to 65.4 percent. The airline's operating revenue per available seat mile (ASM ASM - Assembler Source Language (file name extension) ASM - Assembly (language) ASM - (USN Rating) Aviation Support Equipment Technician (Mechanical) ASM - Abnormal Situation Management ASM - Abominable Snow Man ASM - Abstract State Machine ASM - Academic Specialty Monitor ASM - Access Switching Module (ATM) ASM - Account Services Manager ASM - Account-Specific Marketing (marketing) ASM - Acoustic Surface Measurement) increased 2.1 percent, while its operating cost per ASM increased 6.0 percent due to higher labor, selling, depreciation, landing fees and other costs. Alaska's pretax loss was $33.7 million compared to a pretax loss of $13.7 million a year earlier. Horizon Air's passenger traffic increased 2.0 percent on a 1.4 percent capacity decrease. Its load factor increased 2.1 points to 61.8 percent. The airline's operating revenue per ASM increased 2.0 percent while its operating cost per ASM increased 17.0 percent largely due to higher labor, maintenance and depreciation costs. Horizon's pretax loss was $17.1 million, compared to a $1.4 million pretax loss a year earlier. This report may contain forward-looking statements that are based on the best information currently available to management. These forward-looking statements are intended to be subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are indicated by phrases such as "will", "should", "the Company believes", "we expect" or any other language indicating a prediction of future events. There can be no assurance that actual developments will be those anticipated by the Company. Actual results could differ materially from those projected as a result of a number of factors, some of which the Company cannot predict or control. For a discussion of these factors, please see Item 1 of the Company's Annual Report on Form 10-K for the year ended December 31, 2000. Alaska Air Group is the parent company of Alaska Airlines, Inc. and Horizon Air Industries, Inc.
ALASKA AIR GROUP, INC.
CONSOLIDATED STATEMENT OF INCOME
(In millions, except per share amounts)
Quarter Ended March 31
-----------------------------------------------------
2000 2001 % Change
---- ---- --------
Operating Revenues:
Passenger $ 455.1 $ 479.8 5.4%
Freight and mail 20.3 20.6 1.5
Other 14.3 15.6 9.1
--------- -------
Total operating revenues 489.7 516.0 5.4
--------- -------
Operating Expenses:
Wages and benefits 171.0 192.0 12.3
Contracted services 17.7 20.9 18.1
Aircraft fuel 90.1 89.7 (0.4)
Aircraft maintenance 40.2 50.1 24.6
Aircraft rent 46.4 46.2 (0.4)
Food and beverage service 12.9 14.0 8.5
Commissions 16.5 15.4 (6.7)
Other selling expenses 26.2 31.8 21.4
Depreciation and amortization 23.0 29.9 30.0
Loss on sale of assets (0.1) 0.8 NM
Landing fees and other rentals 22.4 28.3 26.3
Other 40.0 46.4 16.0
--------- -------
Total operating expenses 506.3 565.5 11.7
--------- -------
Operating Loss (16.6) (49.5)
---------- --------
Interest income 5.2 8.1
Interest expense (7.9) (12.1)
Interest capitalized 3.4 3.6
Other income - net 0.5 (1.4)
--------- --------
1.2 (1.8)
--------- --------
Loss before income tax and
accounting change (15.4) (51.3)
Income tax credit (6.2) (18.2)
---------- -------------
Loss Before Accounting Change $ (9.2) $ (33.1)
Cumulative Effect of
Accounting Change,
Net of Income Tax (56.9) -
---------- -------------
Net Loss $ (66.1) $ (33.1)
========== =============
Basic and Diluted Loss
Per Share:
Loss before accounting
change $ (0.35) $ (1.25)
Cumulative effect of
accounting change (2.15) -
--------- -------------
Net Loss $ 2.50 $ (1.25)
========= =============
Shares used for computations: 26.426 26.471
========= ============
ALASKA AIR GROUP, INC.
CONSOLIDATED BALANCE SHEET December 31 March 31
(In millions) 2000 2001
------------ ---------------
Cash and marketable securities $ 462 $ 392
===== =====
Total current assets 806 747
Property and equipment-net 1,730 1,774
Other assets 94 90
--- ---
Total assets $2,630 $2,611
====== ======
Current liabilities $ 711 $ 741
Long-term debt and capital
lease obligations 609 611
Other liabilities and credits 448 429
Shareholders' equity 862 830
---- ----
Total liabilities and equity $2,630 $2,611
====== ======
Alaska Airlines Financial and Statistical Data
Quarter Ended March 31
-----------------------------------
Financial Data (in millions): 2000 2001 % Chg.
---- ---- ----
Operating Revenues:
Passenger $ 360.1 $ 385.1 6.9%
Freight and mail 17.8 18.3 2.8
Other - net 13.6 14.7 8.1
-------- -------
Total Operating Revenues 391.5 418.1 6.8
-------- -------
Operating Expenses:
Wages and benefits 138.6 155.3 12.0
Contracted services 15.2 17.9 17.8
Aircraft fuel 73.8 74.0 0.3
Aircraft maintenance 28.4 31.1 9.5
Aircraft rent 35.8 35.3 (1.4)
Food and beverage service 12.1 13.2 9.1
Commissions 15.6 15.9 1.9
Other selling expenses 20.4 26.0 27.5
Depreciation and amortization 18.6 23.1 24.2
Loss on sale of assets 0.0 0.9 NM
Landing fees and other rentals 17.0 21.5 26.5
Other 31.0 36.4 17.4
-------- -------
Total Operating Expenses 406.5 450.6 10.8
-------- -------
Operating Loss (15.0) (32.5)
--------- --------
Interest income 6.1 9.5
Interest expense (7.9) (12.1)
Interest capitalized 2.6 2.6
Other - net 0.5 (1.2)
-------- --------
1.3 (1.2)
-------- --------
Loss Before Income Tax and
Accounting Change $ (13.7) $ (33.7)
========= ========
Operating Statistics:
Revenue passengers (000) 3,168 3,198 1.0
RPMs (000,000) 2,814 2,895 2.9
ASMs (000,000) 4,231 4,428 4.6
Passenger load factor 66.5% 65.4% (1.1) pts
Breakeven load factor 70.6% 73.4% 2.8 pts
Yield per passenger mile 12.80(cent) 13.30(cent) 3.9
Operating revenue per ASM 9.25(cent) 9.44(cent) 2.1
Operating expenses per ASM 9.61(cent) 10.18(cent) 6.0
Expense per ASM excluding fuel 7.86(cent) 8.51(cent) 8.2
Fuel cost per gallon 99.1(cent) 97.1(cent) (2.0)
Fuel gallons (000,000) 74.5 76.2 2.3
Average number of employees 9,279 10,203 10.0
Aircraft utilization (blk hrs/day) 10.9 11.0 0.9
Operating fleet at period-end 89 96 7.9
Horizon Air Financial and Statistical Data
Quarter Ended March 31
Financial Data (in millions): 2000 2001 % Chg.
---- ---- ----
Operating Revenues:
Passenger $ 97.5 $ 98.2 0.7%
Freight and mail 2.5 2.3 (8.0)
Other - net 1.5 1.5 0.0
-------- -----------
Total Operating Revenues 101.5 102.0 0.5
-------- -----------
Operating Expenses:
Wages and benefits 32.4 36.7 13.3
Contracted services 3.1 3.7 19.4
Aircraft fuel 16.3 15.7 (3.7)
Aircraft maintenance 11.8 19.0 61.0
Aircraft rent 10.6 11.0 3.8
Food and beverage service 0.8 0.8 0.0
Commissions 3.4 2.9 (14.7)
Other selling expenses 5.8 5.8 0.0
Depreciation and amortization 4.3 6.4 48.8
Gain on sale of assets (0.1) (0.1) 0.0
Landing fees and other rentals 5.7 6.9 21.1
Other 8.9 9.9 11.2
-------- -----------
Total Operating Expenses 103.0 118.7 15.2
-------- -----------
Operating Loss (1.5) (16.7)
--------- ------------
Interest expense (0.8) (1.1)
Interest capitalized 0.8 1.1
Other - net 0.1 (0.4)
-------- ------------
0.1 (0.4)
-------- ------------
Loss Before Income Tax $ (1.4) $ (17.1)
========= ============
Operating Statistics:
Revenue passengers (000) 1,190 1,177 (1.1)
RPMs (000,000) 329 336 2.0
ASMs (000,000) 551 543 (1.4)
Passenger load factor 59.7% 61.8% 2.1 pts
Breakeven load factor 60.7% 73.3% 12.6 pts
Yield per passenger mile 29.62(cent) 29.24(cent) (1.3)
Operating revenue per ASM 18.41(cent) 18.78(cent) 2.0
Operating expenses per ASM 18.68(cent) 21.85(cent) 17.0
Expense per ASM excluding fuel 15.73(cent) 18.96(cent) 20.5
Fuel cost per gallon 101.6(cent) 100.1(cent) (1.5)
Fuel gallons (000,000) 16.0 15.6 (2.5)
Average number of employees 3,617 3,923 8.5
Aircraft utilization (blk hrs/day) 8.1 8.1 0.0
Operating fleet at period-end 62 63 1.6
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