Alaska Air Group Reports Record Third Quarter Results.SEATTLE--(BUSINESS WIRE)--Oct. 24, 1996--Alaska Air Group, Inc. (NYSE:ALK) today reported record third quarter net income of $32.8 million, or $2.25 per share ($1.53 per share fully diluted), as compared to net income of $27.4 million or $2.01 per share ($1.30 per share fully diluted) in 1995. Operating income was $63.0 million compared to $61.9 million in 1995. "This marks the fifth consecutive quarter of year over year improvement in our financial results," said John F. Kelly, chairman, president and chief executive officer of Alaska Air Group. "Bottom line, it means we're winning in the highly competitive West Coast marketplace. During the quarter, we served more customers than ever, we posted a record load factor and we improved our operating revenue per available seat mile." "Despite a huge spike in fuel costs and slightly lower fares," Kelly said, "we were able to post a record net income. That demonstrates just how effective our productivity and cost control efforts have been. And despite the challenges of our busiest year ever, Travel & Leisure Magazine recently designated Alaska Airlines as the best airline in the United States. That demonstrates the quality of our employees and their commitment to customer service." Operating revenues for the third quarter rose to $465 million, an increase of 10.8 percent, while operating expenses increased to $402 million, up 12.4 percent. Operating expenses for 1996 included $8.3 million for estimated 1996 employee profit sharing profit sharing, arrangement by which employees receive, in addition to their wages, a share of the net profits of a business. The purpose is to give them an incentive to increase their output through enhanced morale, less wasteful use of materials, better care of equipment, and the like. Profit sharing does not imply participation by the workers in management. (compared to zero for 1995) and a $3.6 million gain on sale of assets (compared to a $0.7 million loss in 1995). Excluding these items, operating expenses increased 11.3 percent. Alaska Airlines' third quarter passenger traffic increased 14.5 percent on a capacity increase of 7.0 percent. Passenger load factor climbed 4.6 points to 70.6 percent, compared to 66.0 percent in 1995. The airline's yield per revenue passenger mile (RPM) decreased 0.8 percent. Operating cost per available seat mile (ASM) increased 5.8 percent, primarily due to higher fuel prices, the federal fuel tax and employee profit sharing. Alaska's pretax income increased to $52.9 million compared to $49.1 million a year earlier. Horizon Air's third quarter passenger traffic increased 0.3 percent on a capacity increase of 0.3 percent. Horizon's passenger load factor stayed constant at 61.7 percent. Horizon's yield per RPM increased 8.5 percent, while its operating cost per ASM increased 9.3 percent. Horizon's pretax income decreased to $6.1 million from $6.5 million a year earlier. For the nine months ended September 30, 1996, Alaska Air Group, Inc. reported a net income of $43.6 million, or $3.06 per share ($2.22 per share fully diluted), as compared to a net income of $18.0 million, or $1.34 per share ($1.22 per share fully diluted), for the first nine months of 1995. Operating revenues increased 14.5 percent to $1.233 billion and operating expenses increased 12.5 percent to $1.136 billion. The operating income for the first nine months of 1996 was $97.4 million compared to $67.4 million last year. The gain on sale of assets is largely due to the sale of a jet aircraft by Alaska Airlines. A new accounting standard requires that gains or losses on long-lived assets be included in operating income. Included in the third quarter results is an accrual for possible profit sharing payments to Alaska Airlines and Horizon Air employees. The accrual of $8.3 million -- $7.6 million to Alaska Airlines employees and $700,000 to Horizon Air employees -- has been calculated on estimated full-year results. To estimate 1996 profit sharing expense, income for the fourth quarter of 1996 was assumed to be comparable to the fourth quarter of 1995. This is an assumption, not a forecast. Using this assumption, the company is fully accrued for estimated profit sharing expense as of September 30, 1996. Given the volatility of the airline industry, this should be interpreted neither as a projection of the final amount that will be allocated for profit sharing nor a forecast of management's thoughts about the company's prospects in the fourth quarter. Alaska Air Group is the parent company of Alaska Airlines, Inc. and Horizon Air Industries, Inc. -0-
ALASKA AIR GROUP, INC.
CONSOLIDATED STATEMENT OF INCOME
(In millions, except per share amounts)
Quarter Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
Operating Revenues:
Passenger $423.0 $377.3 $1,109.8 $957.5
Freight and mail 25.4 26.3 71.7 71.8
Other 16.5 16.0 51.5 47.1
Total operating revenues 464.9 419.6 1,233.0 1,076.4
Operating Expenses:
Wages and benefits 124.1 114.2 355.9 322.5
Employee profit sharing 8.3 0.0 8.3 0.0
Aircraft fuel 65.5 48.5 173.3 131.6
Aircraft maintenance 23.6 20.8 71.7 61.1
Aircraft rent 45.3 43.8 134.7 128.5
Commissions 29.0 26.5 78.9 71.8
Depreciation and amortization 17.0 16.9 51.0 50.9
Loss (gain) on sale of assets (3.6) 0.7 (2.8) 1.4
Landing fees and other rentals 16.1 15.5 46.8 44.5
Other 76.6 70.8 217.8 196.7
Total operating expenses 401.9 357.7 1,135.6 1,009.0
Operating Income 63.0 61.9 97.4 67.4
Interest income 2.6 3.4 8.1 6.7
Interest expense (9.3) (13.3) (30.2) (39.7)
Interest capitalized 0.2 0.0 0.2 0.0
Other income - net 0.1 (1.7) 0.5 (1.2)
----- ----- ----- ------
(6.4) (11.6) (21.4) (34.2)
Income before income tax 56.6 50.3 76.0 33.2
Income tax expense 23.8 22.9 32.4 15.2
Net Income $32.8 $27.4 $43.6 $18.0
Primary Earnings Per Share $2.25 $2.01 $3.06 $1.34
Fully Diluted Earnings
Per Share $1.53 $1.30 $2.22 $1.22
Shares used for computation:
Primary 14.6 13.6 14.3 13.5
Fully diluted 22.7 23.0 22.4 20.4
ALASKA AIR GROUP, INC.
CONSOLIDATED BALANCE SHEET September 30, December 31,
(In millions) 1996 1995
Cash and marketable securities $131.3 $135.1
Total current assets 325.0 338.4
Property and equipment - net 856.8 814.0
Other assets 150.1 161.0
Total assets $1,331.9 $1,313.4
Current liabilities $439.0 $444.8
Long-term debt and capital
lease obligations 452.9 522.4
Other liabilities and credits 162.3 133.7
Shareholders' equity 277.7 212.5
Total liabilities and equity $1,331.9 $1,313.4
ALASKA AIRLINES FINANCIAL AND STATISTICAL DATA
Quarter Ended Nine Months Ended
September 30, September 30,
1996 1995 % Chg. 1996 1995 % Chg.
Financial Data
(in millions):
Operating Revenues:
Passenger $344.3 $303.4 13.5 $892.1 $757.4 17.8
Freight and mail 22.6 23.3 (3.0) 63.4 63.6 (0.3)
Other - net 15.9 16.1 (1.2) 49.3 47.4 4.0
Total Operating
Revenues 382.8 342.8 11.7 1,004.8 868.4 15.7
Operating Expenses:
Wages and benefits 100.4 92.3 8.8 286.7 258.2 11.0
Employee profit
sharing 7.6 0.0 NM 7.6 0.0 NM
Aircraft fuel 56.7 41.2 37.6 148.9 111.6 33.4
Aircraft maintenance 12.9 11.9 8.4 40.8 35.2 15.9
Aircraft rent 36.2 35.0 3.4 108.4 102.7 5.6
Commissions 25.6 21.4 19.6 69.0 57.2 20.6
Depreciation and
amortization 14.3 14.6 (2.1) 42.4 43.9 (3.4)
Loss (gain) on
sale of assets (3.8) 0.7 NM (3.6) 1.4 NM
Landing fees and
other rentals 13.0 12.4 4.8 37.5 35.1 6.8
Other 62.9 58.1 8.3 176.1 159.3 10.5
Total Operating
Expenses 325.8 287.6 13.3 913.8 804.6 13.6
Operating Income 57.0 55.2 3.3 91.0 63.8 42.6
Interest income 2.7 3.5 8.4 7.1
Interest expense (7.1) (10.0) (23.6) (30.7)
Interest capitalized 0.1 0.0 0.1 0.0
Other - net 0.2 0.4 0.7 1.2
----- ------ ----- -----
(4.1) (6.1) (14.4) (22.4)
Income Before
Income Tax $52.9 $49.1 $76.6 $41.4
Operating Statistics:
Revenue
passengers(000) 3,420 2,954 15.8 9,001 7,548 19.2
RPMs (000,000) 2,893 2,528 14.5 7,524 6,464 16.4
ASMs (000,000) 4,100 3,831 7.0 11,409 10,512 8.5
Passenger load
factor 70.6% 66.0% 4.6 pts 65.9% 61.5% 4.4 pts
Breakeven
load factor 59.7% 54.4% 5.3 pts 60.4% 58.1% 2.3 pts
Yield per
passenger mile 11.90 12.00 (0.8) 11.86 11.72 1.2
cents cents cents cents
Operating
revenue per ASM 9.34 8.95 4.4 8.81 8.26 6.6
cents cents cents cents
Operating expenses
per ASM 7.95 7.51 5.8 8.01 7.65 4.7
cents cents cents cents
Fuel cost per
gallon 77.6 61.0 27.1 73.5 60.7 21.1
cents cents cents cents
Average number
of employees 7,877 7,243 8.8 7,562 6,944 8.9
Aircraft
utilization
(block hours) 11.9 11.4 4.3 11.4 10.9 4.9
Operating fleet
at period-end 75 74 1.4 75 74 1.4
HORIZON AIR FINANCIAL AND STATISTICAL DATA
Quarter Ended Nine Months Ended
September 30, September 30,
1996 1995 % Chg. 1996 1995 % Chg.
Financial Data
(in millions):
Operating Revenues:
Passenger $80.5 $73.9 8.9 $222.5 $200.1 11.2
Freight and mail 2.8 2.9 (3.4) 8.4 8.1 3.7
Other-net 0.6 1.0 (40.0) 2.1 2.7 (22.2)
Total Operating
Revenues 83.9 77.8 7.8 233.0 210.9 10.5
Operating Expenses:
Wages and benefits 23.7 21.9 8.2 69.2 64.3 7.6
Employee profit
sharing 0.7 0.0 NM 0.7 0.0 NM
Aircraft fuel 8.9 7.2 23.6 24.4 20.0 22.0
Aircraft maintenance 10.7 8.9 20.2 30.9 25.9 19.3
Aircraft rent 9.1 8.8 3.4 26.3 25.8 1.9
Commissions 5.2 5.1 2.0 14.8 14.6 1.4
Depreciation
and amortization 2.6 2.3 13.0 8.5 6.8 25.0
Loss on sale
of assets 0.2 0.0 NM 0.8 0.0 NM
Landing fees and
other rentals 3.4 3.4 0.0 9.7 9.7 0.0
Other 13.5 13.5 0.0 40.5 39.6 2.3
Total
Operating
Expenses 78.0 71.1 9.7 225.8 206.7 9.2
Operating Income 5.9 6.7 (11.9) 7.2 4.2 71.4
Interest income 0.0 0.0 0.1 0.0
Interest expense (0.2) (0.2) (0.6) (0.6)
Interest capitalized 0.1 0.0 0.1 0.0
Other - net 0.3 0.0 0.2 0.0
---- ---- ---- ----
0.2 (0.2) (0.2) (0.6)
Income Before
Income Tax $6.1 $6.5 $7.0 $3.6
Operating Statistics:
Revenue
passengers (000) 1,022 1,057 (3.4) 2,849 2,869 (0.7)
RPMs (000,000) 239 238 0.3 656 631 3.9
ASMs (000,000) 387 386 0.3 1,097 1,070 2.5
Passenger
load factor 61.7% 61.7% 0.0 pts 59.8% 59.0% 0.8 pts
Breakeven
load factor 56.5% 55.7% 0.8 pts 57.5% 57.8% (0.3) pts
Yield per
passenger mile 33.69 31.04 8.5 33.92 31.68 7.1
cents cents cents cents
Operating revenue
per ASM 21.68 20.17 7.5 21.25 19.71 7.8
cents cents cents cents
Operating
expenses per ASM 20.15 18.44 9.3 20.59 19.31 6.6
cents cents cents cents
Fuel cost
per gallon 79.6 64.5 23.5 77.0 64.3 19.8
cents cents cents cents
Average number
of employees 2,947 2,948 (0.0) 2,873 2,885 (0.4)
Aircraft
utilization
(block hours) 8.0 8.1 (1.8) 7.8 8.1 (4.0)
Operating fleet
at period end 62 68 (8.8) 62 68 (8.8)
CONTACT: Alaska Air Group, Inc. Harry Lehr, 206/431-7032 Lou Cancelmi, 206/433-3170 |
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