Alaska Air Group reports record third quarter profits.

SEATTLE--(BUSINESS WIRE)--Oct. 18, 1995--Alaska Air Group Inc. (NYSE) today reported third quarter net income of $27.4 million, or $2.01 per share ($1.30 per share fully diluted).

This compares to net income of $24.3 million or $1.81 per share ($1.36 per share fully diluted) in 1994. Operating income was $62.6 million, compared to $52.3 million in 1994.

Operating revenues for the third quarter rose to $419.6 million, an increase of 8.5 percent, while operating expenses increased to $357.0 million, up 6.7 percent.

"Our ongoing efforts to improve efficiency, combined with our excellent position in the marketplace and a stabilized fare structure, made this the most profitable third quarter in our 63-year history," said CEO John F. Kelly. "Certainly one of the most gratifying aspects of the quarter was our continued focus on reducing our overall cost structure."

"Looking to the fourth quarter, recent fare cuts that we've matched will severely depress yields. Nonetheless, I'm very optimistic about our long-term outlook because the fundamental strengths of our company are sound. We've never been in a better competitive position," he said.

Alaska Airlines' third quarter passenger traffic increased 10.5 percent on a capacity increase of 12.7 percent. This produced a passenger load factor of 66.0 percent, versus 67.3 percent in 1994. Continuing recent trends, Alaska's operating cost per available seat mile decreased 5.5 percent from the third quarter of 1994 to 7.5 cents. The yield per revenue passenger mile was 12.0 cents, which was 1.7 percent lower than the third quarter of 1994.

Horizon Air's third quarter passenger traffic increased 9.2 percent on a capacity increase of 18.0 percent. Horizon's passenger load factor declined 5.0 points to 61.7 percent. Horizon's operating cost per available seat mile decreased 8.6 percent from the third quarter of 1994 to 18.4 cents. Horizon's yield per revenue passenger mile was 31.0 cents, which was 4.0 percent lower than the third quarter of 1994.

For the nine months ended Sept. 30, 1995, Alaska Air Group Inc. reported net income of $18.0 million, or $1.34 per share ($1.22 per share fully diluted), versus a net income of $27.6 million, or $2.07 per share ($1.76 per share fully diluted), for the first nine months of 1994.

Operating revenues increased 7.9 percent to $1.076 billion and operating expenses increased 9.1 percent to $1.008 billion. The operating profit for the nine months of 1995 was $68.8 million compared to $73.8 million last year.

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 thousands, except per share amounts)

                                 Quarter             Nine Months
                            Ended September 30    Ended September 30
                               1995     1994        1995      1994
Operating Revenues:
Passenger                   $377,292   $349,707   $957,469   $892,173
Freight and mail              26,277     24,833     71,761     67,428
Other                         16,060     12,261     47,164     38,057
Total operating revenues     419,629    386,801  1,076,394    997,658

Operating Expenses:
Wages and benefits           114,231    109,397    322,519    302,526
Aircraft fuel                 48,482     42,598    131,560    109,940
Aircraft maintenance          20,807     17,727     61,126     52,397
Aircraft rent                 43,789     42,623    128,470    123,135
Commissions                   26,502     27,148     71,775     70,799
Depreciation and amortization 16,945     14,475     50,875     41,678
Other                         86,251     80,552    241,279    223,339
Total operating expenses     357,007    334,520  1,007,604    923,814

Operating Income              62,622     52,281     68,790     73,844

Interest income                3,390      2,426      6,701      5,561
Interest expense             (13,315)   (11,985)   (39,713)   (33,672)
Interest capitalized              --         83         --        281
Loss on sale of assets          (702)      (320)    (1,408)      (822)
Other income -net             (1,737)       427     (1,126)     4,310
                             (12,364)    (9,369)   (35,546)   (24,342)

Income before income tax      50,258     42,912      33,244    49,502
Income tax expense            22,906     18,649      15,211    21,871
Net Income                  $ 27,352   $ 24,263   $  18,033  $ 27,631

Primary Earnings Per Share     $2.01      $1.81       $1.34     $2.07
Fully Diluted
 Earnings Per Share            $1.30      $1.36       $1.22     $1.76

Shares used for Computation:
Primary                       13,616     13,386      13,463    13,371
Fully Diluted                 23,075     19,486      20,444    19,725

                       ALASKA AIR GROUP INC.
                    CONSOLIDATED BALANCE SHEET
                          (In thousands)

                                       September 30,   December 31,
                                           1995           1994

Cash and marketable securities        $   143,590      $   104,942
Total current assets                  $   353,507      $   272,643
Property and equipment-net                835,558          859,337
Other assets                              163,308          183,791
Total assets                          $ 1,352,373      $ 1,315,771
Current liabilities                   $   442,716      $   419,747
Long-term debt and capital lease
 obligations                              560,634          589,904
Other liabilities and credits             136,245          114,842
Shareholders' equity                      212,778          191,278
Total liabilities and equity          $ 1,352,373      $ 1,315,771

AIRLINE DATA

Quarter Ended September 30      Alaska               Horizon
Financial Data ($000):      1995      1994       1995      1994

Operating revenues        $342,806   $313,473   $77,836   $74,015
Operating expenses         286,966    269,317    71,136    65,969
Operating income            55,840     44,156     6,700     8,046
Other income (expense)      (6,712)    (5,959)     (230)       (4)
Income before tax         $ 49,128   $ 38,197   $ 6,470   $ 8,042

Operating Data:
Revenue passengers (000)     2,954      2,677     1,057     1,030
RPMs (000,000)               2,528      2,286       238       218
ASMs (000,000)               3,831      3,399       386       327
Passenger load factor        66.0%      67.3%     61.7%     66.7%
Breakeven load factor        54.4%      57.2%     55.7%     58.2%
Revenue per passenger
 mile (in cents)             12.00      12.21     31.04     32.33
Operating cost per
 ASM (in cents)               7.49       7.92     18.44     20.17
Aircraft utilization
 (block hours)                11.4       11.0       8.1       8.4

Nine Months Ended September 30      Alaska              Horizon
Financial Data ($000):         1995      1994       1995      1994

Operating revenues          $868,447   $809,147   $210,857   $190,522
Operating expenses           803,269    747,364    206,598    177,869
Operating income              65,178     61,783      4,259     12,653
Other income (expense)       (23,748)   (16,161)      (629)      (215)
Income before tax           $ 41,430   $ 45,622   $  3,630   $ 12,438

Operating Data:
Revenue passengers (000)       7,548      6,638      2,869      2,545
RPMs (000,000)                 6,464      5,640        631        532
ASMs (000,000)                10,512      8,864      1,070        845
Passenger load factor          61.5%      63.6%      59.0%      62.9%
Breakeven load factor          58.1%      59.4%      57.8%      58.2%
Revenue per passenger
 mile (in cents)               11.72      12.60      31.68      34.14
Operating cost per
 ASM (in cents)                 7.64       8.43      19.31      21.05
Aircraft utilization
 (block hours)                  10.9       10.3        8.1        8.4

CONTACT: Alaska Air, Seattle

Harry Lehr, 206/431-7032

Greg Witter, 206/431-3799