SEATTLE, Jan. 22, 2015 /PRNewswire/ --
Financial Highlights:
- Reported record fourth quarter net income, excluding special
items, of $125 million, or
$0.94 per diluted share, compared to
$77 million, or $0.55 per diluted share in 2013. This quarter's
results compare to a First Call analyst consensus estimate of
$0.93 per share.
- Reported record full-year net income, excluding special items,
of $571 million, or $4.18 per diluted share, compared to $383 million, or $2.70 per diluted share in 2013.
- Reported net income for the fourth quarter under Generally
Accepted Accounting Principles (GAAP) of $148 million, or $1.11 per diluted share, compared to net income
of $78 million, or $0.56 per diluted share in 2013.
- Reported net income for the full year under GAAP of
$605 million, or $4.42 per diluted share, compared to net income
of $508 million, or $3.58 per diluted share in 2013.
- Declared a $0.20 per share
dividend, up 60% from the prior quarter. The dividend will be
paid on March 10, to shareholders of
record as of February 24, 2015.
- Paid $0.125 per-share quarterly
cash dividend on December 3, bringing
total dividend payments in 2014 to $68
million.
- Repurchased 7,316,731 shares of common stock for an average
price of $47.63 during 2014 for
$348 million, or 6.9% of market
capitalization at the beginning of 2014. Since 2007, Air Group has
used $827 million to repurchase 49
million shares at an average price of $16.85.
- Grew passenger revenues by 8% compared to the fourth quarter of
2013, and by 7% compared to full-year 2013.
- Generated record full-year adjusted pretax margin of 17.2% in
2014, compared to 12.4% in 2013.
- Achieved return on invested capital of 18.6% in 2014, compared
to 13.6% in 2013.
- Generated over $1.0 billion in
operating cash flows and $344 million
in free cash flows in 2014.
- Lowered adjusted debt-to-total capitalization ratio to 31% as
of Dec. 31, 2014.
- Held $1.2 billion in unrestricted
cash and marketable securities as of Dec. 31, 2014.
- Became one of only two U.S. airlines with investment grade
credit ratings.
Year-to-date highlights of Alaska Air Group's five-year
strategic plan:
Safety & Compliance
- Launched "Ready, Safe, Go" safety campaign designed to increase
safety awareness across the Air Group System.
People Focus
- Awarded a record $116 million in
incentive pay to employees for 2014, or more than one month's pay
for most employees. Over the last five years, employees have earned
more than $473 million in incentive
pay, averaging 8.7% of annual pay.
- Signed a five-year agreement with Alaska Airline's Flight
Attendants in December 2014.
- Signed a six-year contract with Horizon's aircraft technicians
and fleet service agents in June
2014.
- Signed a five-year contract with Alaska's clerical, office, and passenger
service employees in April 2014.
- Signed a four-year contract with Horizon's dispatchers in
April 2014.
- Completed "Gear Up" - an intensive leadership workshop for over
1,200 leaders at Alaska and
Horizon.
Hassle-free Customer Experience
- Ranked "Highest in Customer Satisfaction Among Traditional
Network Carriers" by J.D. Power and Associates for the seventh year
in a row.
- Ranked as the best airline in the U.S. by The Wall Street
Journal's "Middle Seat" scorecard for two consecutive years.
- Ranked highest by frequent fliers in the first-ever J.D. Power
Airline Loyalty/Rewards Program Satisfaction Report.
- Held the top spot in U.S. Department of Transportation on-time
performance among the largest eight U.S. airlines for the 12 months
ended November 2014.
- Named No. 1 on-time carrier in North
America for the fourth year in a row by FlightStats in
February 2014.
- Launched online self-tag baggage options for passengers flying
from Seattle to San Diego, Anchorage and Juneau.
- Became the launch customer of Boeing's new, innovative,
high-capacity 737 Space Bins, which will increase bag capacity in
the cabin by 48%.
Energetic & Compelling Brand
- Launched Alaska Beyond™ in-flight experience featuring gourmet
Tom Douglas signature meals, new
streaming in-flight entertainment, and power at every seat on
Alaska's 737-800/900/900ER
aircraft.
- Received the 2014 Community Impact Award from Seattle Business
Magazine.
- Celebrated the opening of the Alaska Airlines Center sports
complex at the University of Alaska
Anchorage.
- Committed over $7 million to
support local communities, including job training for workers at
the Seattle-Tacoma airport, STEM-focused education
programs at Seattle's Museum of
Flight, and Seattle's new bicycle
sharing program.
- Flew 13 relief flights to Los
Cabos, Loreto, and
Mazatlan, Mexico and transported
approximately 2,000 passengers to safety following Hurricane
Odile.
Low Fares, Low Costs, and Network Growth
- Ordered ten additional Boeing 737-900ERs, which will further
strengthen Alaska's fuel-efficient
fleet.
- Exercised options for two Q400 aircraft to be delivered in
2017.
- Completed 100% of the cabin improvement project, adding new
Recaro seats and power at every seat for 95 aircraft.
- Increased fuel efficiency (as measured by seat-miles per
gallon) by 2.1% over 2013.
- Added split-scimitar winglets to 48 planned aircraft, which are
expected to improve fuel efficiency by about 1.5% per
aircraft.
- Lowered unit costs excluding fuel and special items for the
fifth consecutive year, to the lowest level ever.
- Grew Seattle departures by 4%
in 2014 and committed to growing Seattle departures by 10% in 2015.
- Added 16 routes during 2014. New routes launched and
announced in the fourth quarter are as follows:
New Non-Stop
Routes Launched in Q4
|
New Non-Stop
Routes (Launch Date)
|
Portland to Puerto
Vallarta
|
Las Vegas to Mammoth
Lakes (1/15/2015)
|
Seattle to
Cancun
|
San Diego to Kona
(3/5/2015)
|
Portland to Los
Cabos
|
Seattle to Washington
D.C. (Dulles) (3/11/2015)
|
|
Seattle to Milwaukee
(7/1/2015)
|
|
Seattle to Oklahoma
City (7/1/2015)
|
|
Portland to St. Louis
(7/1/2015)
|
Alaska Air Group, Inc. (NYSE: ALK) today reported fourth quarter
2014 GAAP net income of $148 million,
or $1.11 per diluted share, compared
to GAAP net income of $78 million, or
$0.56 per diluted share in 2013.
Excluding mark-to-market fuel hedge gains of $6 million ($4
million after tax, or $0.03
per diluted share), a benefit related to the curtailment of certain
postretirement benefit plans and a one-time gain associated with
the settlement of a legal matter for $30
million in aggregate ($19
million after tax, or $0.14
per diluted share), the company reported record fourth quarter 2014
net income of $125 million, or
$0.94 per diluted share, compared to
net income, excluding mark-to-market fuel hedge gains, of
$77 million, or $0.55 per diluted share, in
2013.
The company reported full-year 2014 GAAP net income of
$605 million, compared to
$508 million in the prior
year. Excluding the impact of the items noted in the table
below, the company reported record net income of $571 million, or $4.18 per diluted share for 2014, compared to net
income of $383 million, or
$2.70 per diluted share in 2013.
"Record earnings and the number one airline ranking in The Wall
Street Journal for the second year in a row are proof that our
13,000 employees continue to do a great job serving our customers
and running a reliable operation," said CEO Brad Tilden. "The substantial increase in the
dividend underscores our commitment to shareholders and our
confidence in the future."
The following table reconciles the Company's adjusted net income
and earnings per diluted share (EPS) during the full year and
fourth quarters of 2014 and 2013 to amounts as reported in
accordance with GAAP:
|
Three Months Ended
December 31,
|
|
2014
|
|
2013
|
(in millions,
except per share amounts)
|
Dollars
|
|
Diluted
EPS
|
|
Dollars
|
|
Diluted
EPS
|
Reported GAAP net
income
|
$
|
148
|
|
|
$
|
1.11
|
|
|
$
|
78
|
|
|
$
|
0.56
|
|
Mark-to-market fuel
hedge adjustments, net of tax
|
(4)
|
|
|
(0.03)
|
|
|
(1)
|
|
|
(0.01)
|
|
Special items, net of
tax
|
(19)
|
|
|
(0.14)
|
|
|
—
|
|
|
—
|
|
Non-GAAP adjusted
income and per share amounts
|
$
|
125
|
|
|
$
|
0.94
|
|
|
$
|
77
|
|
|
$
|
0.55
|
|
|
|
|
Twelve Months
Ended December 31,
|
|
2014
|
|
2013
|
(in millions,
except per share amounts)
|
Dollars
|
|
Diluted
EPS
|
|
Dollars
|
|
Diluted
EPS
|
Reported GAAP net
income
|
$
|
605
|
|
|
$
|
4.42
|
|
|
$
|
508
|
|
|
$
|
3.58
|
|
Mark-to-market fuel
hedge adjustments, net of tax
|
(15)
|
|
|
(0.11)
|
|
|
(5)
|
|
|
(0.03)
|
|
Special items, net of
tax
|
(19)
|
|
|
(0.13)
|
|
|
—
|
|
|
—
|
|
Special mileage plan
revenue, net of tax
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(120)
|
|
|
$
|
(0.85)
|
|
Non-GAAP adjusted
income and per share amounts
|
$
|
571
|
|
|
$
|
4.18
|
|
|
$
|
383
|
|
|
$
|
2.70
|
|
Statistical data, as well as a reconciliation of the reported
non-GAAP financial measures, can be found in the accompanying
tables. A glossary of financial terms can be found on the last page
of this release.
A conference call regarding the fourth quarter and full year
results will be simulcast via the Internet at 8:30 a.m. Pacific time on Jan. 22, 2015. It
can be accessed through the company's Web site at
www.alaskaair.com/investors. For those unable to listen to the live
broadcast, a replay will be available after the conclusion of the
call.
References in this news release to "Air Group," "company," "we,"
"us" and "our" refer to Alaska Air Group, Inc. and its
subsidiaries, unless otherwise specified. Alaska Airlines, Inc. and
Horizon Air Industries, Inc. are referred to as "Alaska" and "Horizon," respectively, and
together as our "airlines."
This news release may contain forward-looking statements subject
to the safe harbor protection provided by Section 27A of the
Securities Act of 1933, as amended, Section 21E of the Securities
Exchange Act of 1934, as amended, and the Private Securities
Litigation Reform Act of 1995. These statements relate to future
events and involve known and unknown risks and uncertainties that
may cause actual outcomes to be materially different from those
indicated by any forward-looking statements. For a comprehensive
discussion of potential risk factors, see Item 1A of the company's
Annual Report on Form 10-K for the year ended December 31,
2013. Some of these risks include competition, labor costs and
relations, general economic conditions, increases in operating
costs including fuel, inability to meet cost reduction goals,
seasonal fluctuations in our financial results, an aircraft
accident, and changes in laws and regulations. All of the
forward-looking statements are qualified in their entirety by
reference to the risk factors discussed therein. We operate in a
continually changing business environment, and new risk factors
emerge from time to time. Management cannot predict such new risk
factors, nor can it assess the impact, if any, of such new risk
factors on our business or events described in any forward-looking
statements. We expressly disclaim any obligation to publicly update
or revise any forward-looking statements after the date of this
report to conform them to actual results. Over time, our actual
results, performance or achievements will likely differ from the
anticipated results, performance or achievements that are expressed
or implied by our forward-looking statements, and such differences
might be significant and materially adverse.
Alaska Airlines, a subsidiary of Alaska Air Group (NYSE: ALK),
together with its partner regional airlines, serves more than 100
cities through an expansive network in Alaska, the Lower 48, Hawaii, Canada and Mexico. Alaska Airlines ranked "Highest in
Customer Satisfaction Among Traditional Carriers" in the J.D. Power
North American Airline Satisfaction Study for seven consecutive
years from 2008 to 2014. Alaska Airlines' Mileage Plan also ranked
highest in the J.D. Power 2014 Airline Loyalty/Rewards Program
Satisfaction Report. For reservations, visit www.alaskaair.com .
For more news and information, visit the Alaska Airlines Newsroom
at www.alaskaair.com/newsroom.
CONSOLIDATED
STATEMENTS OF OPERATIONS (unaudited)
|
Alaska Air Group,
Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
(in millions,
except per share amounts)
|
2014
|
|
2013
|
|
Change
|
|
2014
|
|
2013
|
|
Change
|
Operating
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mainline
|
$
|
916
|
|
|
$
|
839
|
|
|
9
|
%
|
|
$
|
3,774
|
|
|
$
|
3,490
|
|
|
8
|
%
|
Regional
|
200
|
|
|
195
|
|
|
3
|
%
|
|
805
|
|
|
777
|
|
|
4
|
%
|
Total passenger
revenue
|
1,116
|
|
|
1,034
|
|
|
8
|
%
|
|
4,579
|
|
|
4,267
|
|
|
7
|
%
|
Freight and
mail
|
26
|
|
|
25
|
|
|
4
|
%
|
|
114
|
|
|
113
|
|
|
1
|
%
|
Other -
net
|
164
|
|
|
151
|
|
|
9
|
%
|
|
675
|
|
|
584
|
|
|
16
|
%
|
Special mileage plan
revenue
|
—
|
|
|
—
|
|
|
NM
|
|
—
|
|
|
192
|
|
|
NM
|
Total Operating
Revenues
|
1,306
|
|
|
1,210
|
|
|
8
|
%
|
|
5,368
|
|
|
5,156
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wages and
benefits
|
304
|
|
|
280
|
|
|
9
|
%
|
|
1,136
|
|
|
1,086
|
|
|
5
|
%
|
Variable incentive
pay
|
32
|
|
|
37
|
|
|
(14)
|
%
|
|
116
|
|
|
105
|
|
|
10
|
%
|
Aircraft fuel,
including hedging gains and losses
|
306
|
|
|
352
|
|
|
(13)
|
%
|
|
1,418
|
|
|
1,467
|
|
|
(3)
|
%
|
Aircraft
maintenance
|
63
|
|
|
60
|
|
|
5
|
%
|
|
229
|
|
|
247
|
|
|
(7)
|
%
|
Aircraft
rent
|
26
|
|
|
30
|
|
|
(13)
|
%
|
|
110
|
|
|
119
|
|
|
(8)
|
%
|
Landing fees and
other rentals
|
72
|
|
|
55
|
|
|
31
|
%
|
|
279
|
|
|
262
|
|
|
6
|
%
|
Contracted
services
|
66
|
|
|
60
|
|
|
10
|
%
|
|
254
|
|
|
221
|
|
|
15
|
%
|
Selling
expenses
|
45
|
|
|
42
|
|
|
7
|
%
|
|
199
|
|
|
179
|
|
|
11
|
%
|
Depreciation and
amortization
|
76
|
|
|
67
|
|
|
13
|
%
|
|
294
|
|
|
270
|
|
|
9
|
%
|
Food and beverage
service
|
25
|
|
|
21
|
|
|
19
|
%
|
|
93
|
|
|
84
|
|
|
11
|
%
|
Other
|
79
|
|
|
76
|
|
|
4
|
%
|
|
308
|
|
|
278
|
|
|
11
|
%
|
Special
items
|
(30)
|
|
|
—
|
|
|
NM
|
|
(30)
|
|
|
—
|
|
|
NM
|
Total Operating
Expenses
|
1,064
|
|
|
1,080
|
|
|
(1)
|
%
|
|
4,406
|
|
|
4,318
|
|
|
2
|
%
|
Operating
Income
|
242
|
|
|
130
|
|
|
86
|
%
|
|
962
|
|
|
838
|
|
|
15
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonoperating
Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
6
|
|
|
4
|
|
|
|
|
|
21
|
|
|
18
|
|
|
|
|
Interest
expense
|
(12)
|
|
|
(14)
|
|
|
|
|
|
(48)
|
|
|
(56)
|
|
|
|
|
Interest
capitalized
|
6
|
|
|
6
|
|
|
|
|
|
20
|
|
|
21
|
|
|
|
|
Other -
net
|
—
|
|
|
(1)
|
|
|
|
|
|
20
|
|
|
(5)
|
|
|
|
|
|
—
|
|
|
(5)
|
|
|
|
|
|
13
|
|
|
(22)
|
|
|
|
|
Income Before
Income Tax
|
242
|
|
|
125
|
|
|
94
|
%
|
|
975
|
|
|
816
|
|
|
19
|
%
|
Income tax
expense
|
94
|
|
|
47
|
|
|
|
|
|
370
|
|
|
308
|
|
|
|
|
Net
Income
|
$
|
148
|
|
|
$
|
78
|
|
|
90
|
%
|
|
$
|
605
|
|
|
$
|
508
|
|
|
19
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per
Share:
|
$
|
1.12
|
|
|
$
|
0.56
|
|
|
|
|
|
$
|
4.47
|
|
|
$
|
3.63
|
|
|
|
|
Diluted Earnings
Per Share:
|
$
|
1.11
|
|
|
$
|
0.56
|
|
|
|
|
|
$
|
4.42
|
|
|
$
|
3.58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Used for
Computation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
132.368
|
|
|
138.670
|
|
|
|
|
|
135.445
|
|
|
139.910
|
|
|
|
|
Diluted
|
133.705
|
|
|
140.484
|
|
|
|
|
|
136.801
|
|
|
141.878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividend
declared per share
|
$
|
0.125
|
|
|
0.100
|
|
|
|
|
|
$
|
0.500
|
|
|
0.200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS(unaudited)
|
|
Alaska Air Group,
Inc.
|
|
|
|
|
|
|
|
(in
millions)
|
December 31,
2014
|
|
December 31,
2013
|
Cash and marketable
securities
|
$
|
1,217
|
|
|
$
|
1,330
|
|
|
|
|
|
|
|
Total current
assets
|
1,756
|
|
|
1,762
|
|
Property and
equipment-net
|
4,299
|
|
|
3,893
|
|
Other
assets
|
126
|
|
|
183
|
|
Total
assets
|
$
|
6,181
|
|
|
$
|
5,838
|
|
|
|
|
|
|
|
Air traffic
liability
|
631
|
|
|
564
|
|
Current portion of
long-term debt
|
117
|
|
|
117
|
|
Other current
liabilities
|
923
|
|
|
899
|
|
Current
liabilities
|
$
|
1,671
|
|
|
$
|
1,580
|
|
Long-term
debt
|
686
|
|
|
754
|
|
Other liabilities and
credits
|
1,697
|
|
|
1,475
|
|
Shareholders'
equity
|
2,127
|
|
|
2,029
|
|
Total liabilities
and shareholders' equity
|
$
|
6,181
|
|
|
$
|
5,838
|
|
|
|
|
|
|
|
Debt to
Capitalization, adjusted for operating leases(a)
|
31%:69%
|
|
|
35%:65%
|
|
|
|
|
|
|
|
Number of common
shares outstanding
|
131.481
|
|
|
137.492
|
|
(a)
Calculated using the present value of remaining aircraft lease
payments.
|
|
|
|
OPERATING
STATISTICS SUMMARY (unaudited)
|
Alaska Air Group,
Inc.
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
|
2014
|
|
2013
|
|
Change
|
|
2014
|
|
2013
|
|
Change
|
Consolidated
Operating Statistics:(a)
|
|
|
|
|
|
|
|
|
|
|
|
Revenue passengers
(PAX) (000)
|
7,282
|
|
6,694
|
|
8.8%
|
|
29,278
|
|
27,414
|
|
6.8%
|
RPMs (000,000)
"traffic"
|
7,640
|
|
6,980
|
|
9.5%
|
|
30,718
|
|
28,833
|
|
6.5%
|
ASMs (000,000)
"capacity"
|
9,156
|
|
8,275
|
|
10.6%
|
|
36,078
|
|
33,672
|
|
7.1%
|
Load
factor
|
83.4%
|
|
84.4%
|
|
(1.0) pts
|
|
85.1%
|
|
85.6%
|
|
(0.5) pts
|
Yield
|
14.61¢
|
|
14.80¢
|
|
(1.3)%
|
|
14.91¢
|
|
14.80¢
|
|
0.7%
|
PRASM
|
12.19¢
|
|
12.49¢
|
|
(2.4)%
|
|
12.69¢
|
|
12.67¢
|
|
0.2%
|
RASM
|
14.27¢
|
|
14.62¢
|
|
(2.4)%
|
|
14.88¢
|
|
14.74¢
|
|
0.9%
|
CASM excluding fuel
and special items(b)
|
8.60¢
|
|
8.81¢
|
|
(2.4)%
|
|
8.36¢
|
|
8.47¢
|
|
(1.3)%
|
Economic fuel cost
per gallon(c)
|
$2.64
|
|
$3.21
|
|
(17.8)%
|
|
$3.08
|
|
$3.30
|
|
(6.7)%
|
Fuel gallons
(000,000)
|
118
|
|
110
|
|
7.3%
|
|
469
|
|
447
|
|
4.9%
|
ASM's per
gallon
|
77.6
|
|
75.2
|
|
3.2%
|
|
76.9
|
|
75.3
|
|
2.1%
|
Average number of
full-time equivalent employees (FTEs)
|
13,059
|
|
12,284
|
|
6.3%
|
|
12,739
|
|
12,163
|
|
4.7%
|
Employee productivity
(PAX/FTEs/months)
|
185.9
|
|
181.6
|
|
2.4%
|
|
191.5
|
|
187.8
|
|
2.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
Mainline Operating
Statistics:
|
|
|
|
|
|
|
|
|
|
|
|
Revenue passengers
(PAX) (000)
|
5,177
|
|
4,764
|
|
8.7%
|
|
20,972
|
|
19,737
|
|
6.3%
|
RPMs (000,000)
"traffic"
|
6,907
|
|
6,308
|
|
9.5%
|
|
27,778
|
|
26,172
|
|
6.1%
|
ASMs (000,000)
"capacity"
|
8,233
|
|
7,438
|
|
10.7%
|
|
32,430
|
|
30,411
|
|
6.6%
|
Load
factor
|
83.9%
|
|
84.8%
|
|
(0.9) pts
|
|
85.7%
|
|
86.1%
|
|
(0.4) pts
|
Yield
|
13.25¢
|
|
13.29¢
|
|
(0.3)%
|
|
13.58¢
|
|
13.33¢
|
|
1.9%
|
PRASM
|
11.12¢
|
|
11.27¢
|
|
(1.3)%
|
|
11.64¢
|
|
11.48¢
|
|
1.4%
|
RASM
|
13.18¢
|
|
13.40¢
|
|
(1.6)%
|
|
13.80¢
|
|
13.52¢
|
|
2.1%
|
CASM excluding fuel
and special items(b)
|
7.70¢
|
|
7.91¢
|
|
(2.7)%
|
|
7.45¢
|
|
7.54¢
|
|
(1.2)%
|
Economic fuel cost
per gallon(c)
|
$2.64
|
|
$3.21
|
|
(17.8)%
|
|
$3.07
|
|
$3.30
|
|
(7.0)%
|
Fuel gallons
(000,000)
|
102
|
|
96
|
|
6.3%
|
|
407
|
|
393
|
|
3.6%
|
ASM's per
gallon
|
80.7
|
|
77.5
|
|
4.1%
|
|
79.7
|
|
77.4
|
|
3.0%
|
Average number of
FTEs
|
10,171
|
|
9,519
|
|
6.8%
|
|
9,910
|
|
9,493
|
|
4.4%
|
Employee productivity
(PAX/FTEs/months)
|
169.7
|
|
166.8
|
|
1.7%
|
|
176.4
|
|
173.3
|
|
1.8%
|
Aircraft
utilization
|
10.3
|
|
10.1
|
|
2.0%
|
|
10.5
|
|
10.6
|
|
(0.9)%
|
Average aircraft
stage length
|
1,190
|
|
1,177
|
|
1.1%
|
|
1,182
|
|
1,177
|
|
0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
Regional Operating
Statistics:(d)
|
|
|
|
|
|
|
|
|
|
|
|
Revenue passengers
(PAX) (000)
|
2,106
|
|
1,930
|
|
9.1%
|
|
8,306
|
|
7,677
|
|
8.2%
|
RPMs (000,000)
"traffic"
|
734
|
|
673
|
|
9.1%
|
|
2,940
|
|
2,661
|
|
10.5%
|
ASMs (000,000)
"capacity"
|
923
|
|
837
|
|
10.3%
|
|
3,648
|
|
3,261
|
|
11.9%
|
Load
factor
|
79.5%
|
|
80.4%
|
|
(0.9) pts
|
|
80.6%
|
|
81.6%
|
|
(1.0) pts
|
Yield
|
27.38¢
|
|
28.99¢
|
|
(5.6)%
|
|
27.40¢
|
|
29.20¢
|
|
(6.2)%
|
PRASM
|
21.76¢
|
|
23.32¢
|
|
(6.7)%
|
|
22.08¢
|
|
23.83¢
|
|
(7.3)%
|
(a)
|
Except for full-time
equivalent employees, data includes information related to
third-party regional capacity purchase flying
arrangements.
|
(b)
|
See a reconciliation
of this non-GAAP measure and Note A for a discussion of why these
measures may be important to investors in the accompanying
pages.
|
(c)
|
See a reconciliation
of economic fuel cost in the accompanying pages.
|
(d)
|
Data presented
includes information related to flights operated by Horizon Air and
third-party carriers.
|
OPERATING SEGMENTS
(unaudited)
|
|
|
|
|
|
Alaska Air Group,
Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31, 2014
|
|
Alaska
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Mainline
|
|
Regional
|
|
Horizon
|
|
Consolidating
|
|
Air Group
Adjusted(a)
|
|
Special
Items(b)
|
|
Consolidated
|
Operating
revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mainline
|
$
|
916
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
916
|
|
|
$
|
—
|
|
|
$
|
916
|
|
Regional
|
—
|
|
|
200
|
|
|
—
|
|
|
—
|
|
|
200
|
|
|
—
|
|
|
200
|
|
Total
passenger revenues
|
916
|
|
|
200
|
|
|
—
|
|
|
—
|
|
|
1,116
|
|
|
—
|
|
|
1,116
|
|
Revenue from CPA with
Alaska
|
—
|
|
|
—
|
|
|
94
|
|
|
(94)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Freight and
mail
|
25
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
26
|
|
Other-net
|
144
|
|
|
19
|
|
|
1
|
|
|
—
|
|
|
164
|
|
|
—
|
|
|
164
|
|
Total operating
revenues
|
1,085
|
|
|
220
|
|
|
95
|
|
|
(94)
|
|
|
1,306
|
|
|
—
|
|
|
1,306
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses,
excluding fuel
|
634
|
|
|
159
|
|
|
92
|
|
|
(97)
|
|
|
788
|
|
|
(30)
|
|
|
758
|
|
Economic
fuel
|
271
|
|
|
41
|
|
|
—
|
|
|
—
|
|
|
312
|
|
|
(6)
|
|
|
306
|
|
Total operating
expenses
|
905
|
|
|
200
|
|
|
92
|
|
|
(97)
|
|
|
1,100
|
|
|
(36)
|
|
|
1,064
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonoperating
income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
5
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
6
|
|
|
—
|
|
|
6
|
|
Interest
expense
|
(7)
|
|
|
1
|
|
|
(2)
|
|
|
(4)
|
|
|
(12)
|
|
|
—
|
|
|
(12)
|
|
Other
|
5
|
|
|
(1)
|
|
|
2
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
(3)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Income (loss)
before income tax
|
$
|
183
|
|
|
$
|
20
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
206
|
|
|
$
|
36
|
|
|
$
|
242
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31, 2013
|
|
Alaska
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Mainline
|
|
Regional
|
|
Horizon
|
|
Consolidating
|
|
Air Group
Adjusted(a)
|
|
Special
Items(b)
|
|
Consolidated
|
Operating
revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mainline
|
$
|
839
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
839
|
|
|
$
|
—
|
|
|
$
|
839
|
|
Regional
|
—
|
|
|
195
|
|
|
—
|
|
|
—
|
|
|
195
|
|
|
—
|
|
|
195
|
|
Total
passenger revenues
|
839
|
|
|
195
|
|
|
—
|
|
|
—
|
|
|
1,034
|
|
|
—
|
|
|
1,034
|
|
Revenue from CPA with
Alaska
|
—
|
|
|
—
|
|
|
94
|
|
|
(94)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Freight and
mail
|
24
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|
—
|
|
|
25
|
|
Other-net
|
133
|
|
|
17
|
|
|
1
|
|
|
—
|
|
|
151
|
|
|
—
|
|
|
151
|
|
Total operating
revenues
|
996
|
|
|
213
|
|
|
95
|
|
|
(94)
|
|
|
1,210
|
|
|
—
|
|
|
1,210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses,
excluding fuel
|
589
|
|
|
145
|
|
|
88
|
|
|
(94)
|
|
|
728
|
|
|
—
|
|
|
728
|
|
Economic
fuel
|
307
|
|
|
47
|
|
|
—
|
|
|
—
|
|
|
354
|
|
|
(2)
|
|
|
352
|
|
Total operating
expenses
|
896
|
|
|
192
|
|
|
88
|
|
|
(94)
|
|
|
1,082
|
|
|
(2)
|
|
|
1,080
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonoperating
income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
Interest
expense
|
(8)
|
|
|
—
|
|
|
(4)
|
|
|
(2)
|
|
|
(14)
|
|
|
—
|
|
|
(14)
|
|
Other
|
6
|
|
|
(3)
|
|
|
1
|
|
|
1
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|
2
|
|
|
(3)
|
|
|
(3)
|
|
|
(1)
|
|
|
(5)
|
|
|
—
|
|
|
(5)
|
|
Income (loss)
before income tax
|
$
|
102
|
|
|
$
|
18
|
|
|
$
|
4
|
|
|
$
|
(1)
|
|
|
$
|
123
|
|
|
$
|
2
|
|
|
$
|
125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING SEGMENTS
(unaudited)
|
|
|
|
|
|
|
|
|
|
Alaska Air Group,
Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months
Ended December 31, 2014
|
|
Alaska
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Mainline
|
|
Regional
|
|
Horizon
|
|
Consolidating
|
|
Air Group
Adjusted(a)
|
|
Special
Items(b)
|
|
Consolidated
|
Operating
revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mainline
|
$
|
3,774
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,774
|
|
|
$
|
—
|
|
|
$
|
3,774
|
|
Regional
|
—
|
|
|
805
|
|
|
—
|
|
|
—
|
|
|
805
|
|
|
—
|
|
|
805
|
|
Total
passenger revenues
|
3,774
|
|
|
805
|
|
|
—
|
|
|
—
|
|
|
4,579
|
|
|
—
|
|
|
4,579
|
|
Revenue from CPA with
Alaska
|
—
|
|
|
—
|
|
|
371
|
|
|
(371)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Freight and
mail
|
109
|
|
|
5
|
|
|
—
|
|
|
|
|
|
114
|
|
|
—
|
|
|
114
|
|
Other-net
|
592
|
|
|
78
|
|
|
5
|
|
|
|
|
|
675
|
|
|
|
|
|
675
|
|
Total operating
revenues
|
4,475
|
|
|
888
|
|
|
376
|
|
|
(371)
|
|
|
5,368
|
|
|
—
|
|
|
5,368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses,
excluding fuel
|
2,417
|
|
|
623
|
|
|
349
|
|
|
(371)
|
|
|
3,018
|
|
|
(30)
|
|
|
2,988
|
|
Economic
fuel
|
1,251
|
|
|
190
|
|
|
—
|
|
|
—
|
|
|
1,441
|
|
|
(23)
|
|
|
1,418
|
|
Total operating
expenses
|
3,668
|
|
|
813
|
|
|
349
|
|
|
(371)
|
|
|
4,459
|
|
|
(53)
|
|
|
4,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonoperating
income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
20
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
21
|
|
|
—
|
|
|
21
|
|
Interest
expense
|
(32)
|
|
|
—
|
|
|
(12)
|
|
|
(4)
|
|
|
(48)
|
|
|
—
|
|
|
(48)
|
|
Other
|
39
|
|
|
(1)
|
|
|
2
|
|
|
—
|
|
|
40
|
|
|
—
|
|
|
40
|
|
|
27
|
|
|
(1)
|
|
|
(10)
|
|
|
(3)
|
|
|
13
|
|
|
—
|
|
|
13
|
|
Income (loss)
before income tax
|
$
|
834
|
|
|
$
|
74
|
|
|
$
|
17
|
|
|
$
|
(3)
|
|
|
$
|
922
|
|
|
$
|
53
|
|
|
$
|
975
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months
Ended December 31, 2013
|
|
Alaska
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Mainline
|
|
Regional
|
|
Horizon
|
|
Consolidating
|
|
Air Group
Adjusted(a)
|
|
Special
Items(b)
|
|
Consolidated
|
Operating
revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mainline
|
$
|
3,490
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,490
|
|
|
$
|
—
|
|
|
$
|
3,490
|
|
Regional
|
—
|
|
|
777
|
|
|
—
|
|
|
—
|
|
|
777
|
|
|
—
|
|
|
777
|
|
Total
passenger revenues
|
3,490
|
|
|
777
|
|
|
—
|
|
|
—
|
|
|
4,267
|
|
|
—
|
|
|
4,267
|
|
Revenue from CPA with
Alaska
|
—
|
|
|
—
|
|
|
368
|
|
|
(368)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Freight and
mail
|
109
|
|
|
4
|
|
|
—
|
|
|
|
|
|
113
|
|
|
—
|
|
|
113
|
|
Other-net
|
513
|
|
|
66
|
|
|
5
|
|
|
|
|
|
584
|
|
|
192
|
|
|
776
|
|
Total operating
revenues
|
4,112
|
|
|
847
|
|
|
373
|
|
|
(368)
|
|
|
4,964
|
|
|
192
|
|
|
5,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses,
excluding fuel
|
2,293
|
|
|
585
|
|
|
341
|
|
|
(368)
|
|
|
2,851
|
|
|
—
|
|
|
2,851
|
|
Economic
fuel
|
1,294
|
|
|
181
|
|
|
—
|
|
|
—
|
|
|
1,475
|
|
|
(8)
|
|
|
1,467
|
|
Total operating
expenses
|
3,587
|
|
|
766
|
|
|
341
|
|
|
(368)
|
|
|
4,326
|
|
|
(8)
|
|
|
4,318
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonoperating
income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
18
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
18
|
|
Interest
expense
|
(38)
|
|
|
—
|
|
|
(14)
|
|
|
(4)
|
|
|
(56)
|
|
|
—
|
|
|
(56)
|
|
Other
|
25
|
|
|
(12)
|
|
|
2
|
|
|
1
|
|
|
16
|
|
|
—
|
|
|
16
|
|
|
5
|
|
|
(12)
|
|
|
(12)
|
|
|
(3)
|
|
|
(22)
|
|
|
—
|
|
|
(22)
|
|
Income (loss)
before income tax
|
$
|
530
|
|
|
$
|
69
|
|
|
$
|
20
|
|
|
$
|
(3)
|
|
|
$
|
616
|
|
|
$
|
200
|
|
|
$
|
816
|
|
(a)
|
The adjusted column
represents the financial information that is reviewed by management
to assess performance of operations and determine capital
allocations and does not include certain charges. See Note A for
further information in the accompanying pages.
|
(b)
|
Includes accounting
adjustments related to special mileage plan revenue, mark-to-market
fuel-hedge accounting charges, non-cash curtailment gain, and a
one-time gain related to a legal matter.
|
|
|
|
Alaska Air Group,
Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RASM
RECONCILIATION (unaudited)
|
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
(in
millions)
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Total operating
revenues
|
$
|
1,306
|
|
|
$
|
1,210
|
|
|
$
|
5,368
|
|
|
$
|
5,156
|
|
Less: special mileage
plan revenue
|
—
|
|
|
—
|
|
|
—
|
|
|
192
|
|
Adjusted
Revenue
|
$
|
1,306
|
|
|
$
|
1,210
|
|
|
$
|
5,368
|
|
|
$
|
4,964
|
|
Consolidated
ASMs
|
9,156
|
|
|
8,275
|
|
|
36,078
|
|
|
33,672
|
|
RASM
|
14.27
|
¢
|
|
14.62
|
¢
|
|
14.88
|
¢
|
|
14.74
|
¢
|
|
|
|
|
|
|
|
|
|
|
|
|
CASM EXCLUDING
FUEL RECONCILIATION (unaudited)
|
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
(in
cents)
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
CASM
|
11.61
|
¢
|
|
13.05
|
¢
|
|
12.21
|
¢
|
|
12.82
|
¢
|
Less the following
components:
|
|
|
|
|
|
|
|
|
|
|
|
Aircraft fuel,
including hedging gains and losses
|
3.34
|
|
|
4.24
|
|
|
3.93
|
|
|
4.35
|
|
Special
items
|
(0.33)
|
|
|
—
|
|
|
(0.08)
|
|
|
—
|
|
CASM excluding
fuel
|
8.60
|
¢
|
|
8.81
|
¢
|
|
8.36
|
¢
|
|
8.47
|
¢
|
|
|
|
|
|
|
|
|
|
|
|
|
Mainline:
|
|
|
|
|
|
|
|
|
|
|
|
CASM
|
10.56
|
¢
|
|
12.02
|
¢
|
|
11.15
|
¢
|
|
11.77
|
¢
|
Less the following
components:
|
|
|
|
|
|
|
|
|
|
|
|
Aircraft fuel,
including hedging gains and losses
|
3.22
|
|
|
4.11
|
|
|
3.79
|
|
|
4.23
|
|
Special
items
|
(0.36)
|
|
|
—
|
|
|
(0.09)
|
|
|
—
|
|
CASM excluding
fuel
|
7.70
|
¢
|
|
7.91
|
¢
|
|
7.45
|
¢
|
|
7.54
|
¢
|
|
|
|
|
|
|
|
|
|
|
|
|
FUEL
RECONCILIATIONS (unaudited)
|
Alaska Air Group,
Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
2014
|
|
2013
|
(in millions,
except for per gallon amounts)
|
Dollars
|
|
Cost/Gal
|
|
Dollars
|
|
Cost/Gal
|
Raw or "into-plane"
fuel cost
|
$
|
305
|
|
|
$
|
2.58
|
|
|
$
|
347
|
|
|
$
|
3.15
|
|
Losses on settled
hedges
|
7
|
|
|
0.06
|
|
|
6
|
|
|
0.06
|
|
Consolidated
economic fuel expense
|
$
|
312
|
|
|
$
|
2.64
|
|
|
$
|
354
|
|
|
$
|
3.21
|
|
Mark-to-market fuel
hedge adjustments
|
(6)
|
|
|
(0.05)
|
|
|
(2)
|
|
|
0.10
|
|
GAAP fuel
expense
|
$
|
306
|
|
|
$
|
2.59
|
|
|
$
|
352
|
|
|
$
|
3.20
|
|
Fuel
gallons
|
118
|
|
|
|
|
|
110
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months
Ended December 31,
|
|
2014
|
|
2013
|
(in millions,
except for per gallon amounts)
|
Dollars
|
|
Cost/Gal
|
|
Dollars
|
|
Cost/Gal
|
Raw or "into-plane"
fuel cost
|
$
|
1,400
|
|
|
$
|
2.99
|
|
|
$
|
1,423
|
|
|
$
|
3.19
|
|
Losses on settled
hedges
|
41
|
|
|
0.09
|
|
|
52
|
|
|
0.11
|
|
Consolidated
economic fuel expense
|
$
|
1,442
|
|
|
$
|
3.08
|
|
|
$
|
1,475
|
|
|
$
|
3.30
|
|
Mark-to-market fuel
hedge adjustments
|
(23)
|
|
|
(0.05)
|
|
|
(8)
|
|
|
(0.02)
|
|
GAAP fuel
expense
|
$
|
1,418
|
|
|
$
|
3.03
|
|
|
$
|
1,467
|
|
|
$
|
3.28
|
|
Fuel
gallons
|
469
|
|
|
|
|
|
447
|
|
|
|
|
Note A: Pursuant to Regulation G, we are providing
disclosure of the reconciliation of reported non-GAAP financial
measures to their most directly comparable financial measures
reported on a GAAP basis. We believe that consideration of these
non-GAAP financial measures may be important to investors for the
following reasons:
- By eliminating fuel expense and certain special items from our
unit metrics, we believe that we have better visibility into the
results of operations without the consideration of accounting
changes or our non-fuel cost-reduction initiatives. Our
industry is highly competitive and is characterized by high fixed
costs, so even a small reduction in non-fuel operating costs can
result in a significant improvement in operating results. In
addition, we believe that all domestic carriers are similarly
impacted by changes in jet fuel costs over the long run, so it is
important for management (and thus investors) to understand the
impact of (and trends in) company-specific cost drivers such as
labor rates and productivity, airport costs, maintenance costs,
etc., which are more controllable by management.
- Operating revenue per ASM (RASM) excludes a favorable, one-time
"special" revenue item of $192
million primarily related to our modified affinity card
agreement with Bank of America, executed in July 2013. In accordance with accounting
standards, we recorded this one-time special revenue item in the
third quarter of 2013. This is purely an accounting change and the
prior period results do not reflect the economics of the agreement;
rather it reflects a non-cash adjustment of the value of miles
outstanding in the program. We believe it is appropriate to exclude
this special revenue item from recurring revenues from
operations.
- Cost per ASM (CASM) excluding fuel and certain special items is
one of the most important measures used by management and by the
Air Group Board of Directors in assessing quarterly and annual cost
performance.
- Adjusted Income before Income Taxes and CASM excluding fuel
(and other items as specified in our plan documents) are important
metrics for the employee incentive plan that covers all Air Group
employees.
- CASM excluding fuel and certain special items is a measure
commonly used by industry analysts, and we believe it is the basis
by which they compare our airlines to others in the
industry. The measure is also the subject of frequent
questions from investors.
- Disclosure of the individual impact of certain noted items
provides investors the ability to measure and monitor performance
both with and without these special items. We believe that
disclosing the impact of certain items, such as fleet transition
costs or special revenues, is important because it provides
information on significant items that are not necessarily
indicative of future performance. Industry analysts and investors
consistently measure our performance without these items for better
comparability between periods and among other airlines.
- Although we disclose our passenger unit revenues, we do not
(nor are we able to) evaluate unit revenues excluding the impact
that changes in fuel costs have had on ticket prices. Fuel
expense represents a large percentage of our total operating
expenses. Fluctuations in fuel prices often drive changes in
unit revenues in the mid-to-long term. Although we believe it
is useful to evaluate non-fuel unit costs for the reasons noted
above, we would caution readers of these financial statements not
to place undue reliance on unit costs excluding fuel as a measure
or predictor of future profitability because of the significant
impact of fuel costs on our business.
Note B: Air Group has two operating airlines - Alaska
Airlines and Horizon Air. Each is a regulated airline with
separately managed operations. To manage the two operating
airlines, management views the business in three operating
segments. Alaska operates a fleet
of passenger jets (Alaska Mainline) and contracts with Horizon,
SkyWest Airlines, Inc. (SkyWest), and Peninsula Airways, Inc.
(PenAir) for regional capacity under which Alaska receives all passenger revenue from
those flights (Alaska Regional). Horizon operates a fleet of
turboprop aircraft and sells all of its capacity to Alaska pursuant to a capacity purchase
arrangement (Horizon). The Company believes the amounts paid by
Alaska to Horizon approximate
current market rates received by other regional carriers for
similar flying and are available to pay for various Horizon
operating expenses such as crew expenses, maintenance, and aircraft
ownership costs. All inter-company revenues and expenses between
Alaska and Horizon are eliminated
in consolidation.
Glossary of Terms
Aircraft Utilization - block hours per day; this
represents the average number of hours our aircraft are flying
Aircraft Stage Length - represents the average miles
flown per aircraft departure
ASMs - available seat miles, or "capacity"; represents
total seats available across the fleet multiplied by the number of
miles flown
CASM - operating costs per ASM, or "unit cost";
represents all operating expenses including fuel and special
items
CASMex - operating costs excluding fuel and special items
per ASM; this metric is used to help track progress toward
reduction of non-fuel operating costs since fuel is largely out of
our control
Debt-to-capitalization ratio - represents adjusted debt
(long-term debt plus the present value of future operating lease
payments) divided by total equity plus adjusted debt
Diluted Earnings per Share - represents earnings per
share using fully diluted shares outstanding
Diluted Shares - represents the total number of shares
that would be outstanding if all possible sources of conversion,
such as stock options, were exercised
Economic Fuel - best estimate of the cash cost of fuel,
net of the impact of our fuel-hedging program
Load Factor - RPMs as a percentage of ASMs; represents
the number of available seats that were filled with paying
passengers
Mainline - represents flying Boeing 737 jets and all
associated revenues and costs
PRASM - passenger revenue per ASM; commonly called
"passenger unit revenue"
Productivity - number of revenue passengers per full-time
equivalent employee
RASM - operating revenue per ASMs, or "unit revenue";
operating revenue includes all passenger revenue, freight &
mail, Mileage Plan, and other ancillary revenue; represents the
average total revenue for flying one seat one mile
Regional - represents capacity purchased by Alaska from Horizon, SkyWest, and
PenAir. In this segment, Alaska Regional records actual
on-board passenger revenue, less costs such as fuel, distribution
costs, and payments made to Horizon, SkyWest and PenAir under the
respective capacity purchased arrangement (CPAs).
Additionally, Alaska Regional includes an allocation of corporate
overhead such as IT, finance, other administrative costs incurred
by Alaska and on behalf of
Horizon.
RPMs - revenue passenger miles, or "traffic"; represents
the number of seats that were filled with paying passengers; one
passenger traveling one mile is one RPM
Yield - passenger revenue per RPM; represents the average
revenue for flying one passenger one mile
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/alaska-air-group-reports-record-adjusted-fourth-quarter-2014-and-full-year-results-and-raises-dividend-60-300024129.html
SOURCE Alaska Air Group