SEATTLE, July 21, 2016 /PRNewswire/ --
Financial Highlights:
- Reported record second quarter net income, excluding special
items, of $263 million, a 14%
increase over the second quarter of 2015. Adjusted diluted earnings
per share of $2.12 was a 20% increase
over the second quarter of 2015. This quarter's results exceed
First Call analyst consensus estimate of $2.09 per share.
- Reported net income for the second quarter under Generally
Accepted Accounting Principles (GAAP) of $260 million or $2.10 per diluted share, compared to net income
of $234 million, or $1.79 per diluted share in 2015.
- Paid $0.275 per-share quarterly
cash dividend in the second quarter, a 38% increase over the
dividend paid in the second quarter of 2015.
- Generated approximately $900
million of operating cash flow and $560 million of free cash flow in the first six
months of 2016.
- Grew passenger revenues by 3% compared to the second quarter of
2015.
- Expanded adjusted pre-tax margins from 25.7% in the second
quarter of 2015, to 28.4% in the second quarter of 2016.
- Achieved 25.3% adjusted pre-tax margin on a trailing twelve
month basis.
- Achieved return on invested capital of 25.9% for the 12-month
period ending June 30, 2016, compared
to 22.0% for the 12-month period ending June 30, 2015.
- Lowered adjusted debt-to-capitalization ratio to 25% as of
June 30, 2016.
- Held $1.6 billion in unrestricted
cash and marketable securities as of June
30, 2016.
Planned Acquisition of Virgin America:
- Announced proposed acquisition of Virgin America, Inc. (Virgin
America) on April 4, 2016.
- Announced Peter Hunt, currently
Virgin America's senior vice president and chief financial officer,
as the president of the planned Virgin America subsidiary upon
transaction close, expected in the fourth quarter this year.
- Recorded special items of $14
million in the second quarter for merger-related costs.
Operational Highlights:
- Ranked "Highest in Customer Satisfaction Among Traditional
Carriers" in 2016 by J.D. Power for the ninth year in a row.
- Ranked "Highest in Customer Satisfactions With Airline Loyalty
Rewards Programs" in 2016 by J.D. Power for the third consecutive
year.
- Joined the Standard & Poors 500 Index. Companies included
in the S&P 500 are chosen by the S&P Index Committee based
on their size, earnings history and liquidity, among other
factors.
- Announced enhanced benefits to the Alaska Airlines Visa
Signature credit card and the Alaska Airlines Visa Business credit
card including the elimination of foreign transaction fees and
increased bonus miles.
- Held the No. 1 spot in U.S. Department of Transportation
on-time performance among the six largest U.S. airlines for the 12
months ended May 2016.
- Ranked in the Top 200 in the 2016 Forbes "America's Best
Employers" survey.
- Ranked among the Fortune 500 for the third year in a row.
- Announced a new codeshare agreement and frequent flier
partnership with Japan Airlines, providing Alaska customers seamless travel and mileage
earning opportunities.
- Flew the first commercial flight using sustainable
alcohol-to-jet biofuel made from U.S. grown corn, continuing
Alaska's commitment to reduce its
carbon emissions.
- Received the Department of Defense 2016 Freedom Award, the
highest recognition given to employers by the U.S. government for
their support of National Guard and Reserve members.
- Received the Seattle-Tacoma International Airport Green Gateway
Environmental Excellence Award for the second year in a row, as a
result of efforts in reducing emissions, recycling and waste
reduction and lowered energy consumption.
- Received 15th Diamond Awards of Excellence from the Federal
Aviation Administration, recognizing both Alaska and Horizon's aircraft technicians for
their commitment to training.
- Earned first place in the commercial aviation division and
first place overall at the 2016 Annual International Aerospace
Maintenance Competition, surpassing over 50 teams from around the
globe.
New routes launched and announced in the second quarter are as
follows:
New Non-Stop
Routes Launched in Q2
|
New Non-Stop
Routes Announced (Launch Dates)
|
San Diego to San
Jose, California
|
Portland, Oregon to
Sun Valley, Idaho (12/17/16)
|
San Jose to Orange
County, California
|
Portland to Orlando,
Florida (3/16/17)
|
Portland to
Atlanta
|
San Diego to
Steamboat Springs, Colorado (12/17/16)
|
Anchorage, Alaska to
Spokane, Washington
|
Seattle to San Luis
Obispo, California (4/13/17)
|
|
Los Angeles to
Havana, Cuba (TBD)(a)
|
|
(a)
Tentatively awarded by the Department of Transportation (DOT).
Final DOT determination is expected during the third quarter of
2016.
|
Alaska Air Group, Inc., (NYSE: ALK) today reported second
quarter 2016 GAAP net income of $260
million, or $2.10 per diluted
share, compared to $234 million, or
$1.79 per diluted share in the second
quarter of 2015. Excluding the impact of mark-to-market fuel hedge
adjustments and merger costs, the company reported record adjusted
net income of $263 million, or
$2.12 per diluted share, compared to
adjusted net income of $230 million,
or $1.76 per diluted share, in
2015.
"This was a great quarter for us. From strong operational and
financial performance to a growing customer base, our team
delivered," said chief executive officer Brad Tilden. "I want to thank our terrific
people, who were once again recognized by J.D. Power for having the
highest customer satisfaction among traditional network airlines
for the 9th consecutive year. All of us at Alaska are enthusiastically looking forward to
our merger with Virgin America and creating a larger national reach
while fortifying our presence along the entire West Coast."
The following table reconciles the company's reported GAAP net
income and earnings per diluted share (Diluted EPS) during the
second quarters of 2016 and 2015 to adjusted amounts:
|
Three Months Ended
June 30,
|
|
2016
|
|
2015
|
(in millions,
except per-share amounts)
|
Dollars
|
|
Diluted
EPS
|
|
Dollars
|
|
Diluted
EPS
|
Reported GAAP net
income
|
$
|
260
|
|
|
$
|
2.10
|
|
|
$
|
234
|
|
|
$
|
1.79
|
|
Mark-to-market fuel
hedge adjustments, net of tax
|
(6)
|
|
|
(0.05)
|
|
|
(4)
|
|
|
(0.03)
|
|
Special items -
merger costs, net of tax
|
9
|
|
|
0.07
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-GAAP adjusted
income and per-share amounts
|
$
|
263
|
|
|
$
|
2.12
|
|
|
$
|
230
|
|
|
$
|
1.76
|
|
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 second quarter results will be
simulcast on the internet at 8:30 a.m.
Pacific time on July 21, 2016.
It can be accessed through the company's website 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.
Additional Information About the Merger and Where to Find
It
This communication may be deemed to be solicitation material in
respect of the merger of Virgin America, Inc. ("Virgin America")
with a wholly owned subsidiary of Alaska Air Group. Virgin America
has filed relevant materials with the Securities and Exchange
Commission (the "SEC"), including a definitive proxy statement, in
connection with the solicitation of proxies for the merger. The
definitive proxy statement contains important information about the
proposed merger and related matters. BEFORE MAKING A VOTING
DECISION, STOCKHOLDERS OF VIRGIN AMERICA ARE URGED TO READ THE
DEFINITIVE PROXY STATEMENT AND OTHER RELEVANT MATERIALS CAREFULLY
AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN IMPORTANT INFORMATION
ABOUT VIRGIN AMERICA AND THE MERGER. Stockholders may obtain copies
of the proxy statement and other relevant materials and any other
documents filed by Virgin America with the SEC for no charge at the
SEC's website at www.sec.gov. In addition, stockholders will be
able to obtain free copies of the proxy statement from Virgin
America by contacting Virgin America's Investor Relations
Department by telephone at (650) 762-7000, by mail to Virgin
America Inc., Attention: Investor Relations Department, 555 Airport
Boulevard, Burlingame, California
94010, or by going to Virgin America's Investor Relations page on
its corporate website at http://ir.virginamerica.com.
Participants in the Solicitation
Alaska Air Group, Virgin America and certain of their respective
directors, executive officers and other employees may be deemed to
be participants in the solicitation of proxies from Virgin
America's stockholders in respect of the merger. Information
concerning the ownership of Virgin America securities by Virgin
America's directors and executive officers is included in their SEC
filings on Forms 3, 4, and 5, and additional information about
Virgin America's directors and executive officers is also available
in Virgin America's proxy statement for its 2016 annual meeting of
stockholders filed with the SEC on March 25,
2016, and is supplemented by other public filings made, and
to be made, with the SEC by Virgin America. Information concerning
Alaska Air Group's directors and executive officers is available in
Alaska Air Group's proxy statement for its 2016 annual meeting of
stockholders filed with the SEC on April 1,
2016. Other information regarding persons who may be deemed
participants in the proxy solicitation, including their respective
interests by security holdings or otherwise, is set forth in the
definitive proxy statement that Virgin America has filed with the
SEC in connection with the special meeting of stockholders to be
held on July 26, 2016. These
documents can be obtained free of charge from the sources indicated
above.
Forward-Looking Statements
This communication contains forward-looking statements, within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities and Exchange Act of 1934, as amended.
These statements relate to future events, Alaska Air Group and the
proposed merger of Virgin America with a wholly owned subsidiary of
Alaska Air Group. Forward-looking statements are statements that
are not historical facts. These statements can be identified by the
use of forward-looking terminology such as "believe," " expect,"
"may," "likely," "should," "project," "could," "plan," "goal,"
"potential," "pro forma," "seek," "estimate," "intend" or
"anticipate" or the negative thereof or comparable terminology, and
include discussions of strategy, financial projections, guidance
and estimates (including their underlying assumptions), statements
regarding plans, objectives, expectations or consequences of
announced transactions, and statements about the future
performance, operations and services of Alaska Air Group. Alaska
Air Group cautions readers not to place undue reliance on these
statements. These forward-looking statements are subject to a
variety of risks and uncertainties. Consequently, actual results
and experience may materially differ from those contained in any
forward-looking statements. Such risks and uncertainties include
the following: the failure to obtain Virgin America stockholder
approval of the proposed merger; the possibility that the closing
conditions to the proposed merger may not be satisfied or waived,
including that a governmental entity may prohibit, delay or refuse
to grant a necessary regulatory approval; delay in closing the
merger or the possibility of non-consummation of the merger; the
occurrence of any event that could give rise to termination of the
merger agreement; the risk that stockholder litigation in
connection with the contemplated merger may affect the timing or
occurrence of the contemplated merger or result in significant
costs of defense, indemnification and liability; risks inherent in
the achievement of anticipated synergies and the timing thereof;
risks related to the disruption of the merger to Virgin America and
its management; the effect of the announcement of the merger on
Virgin America's ability to retain and hire key personnel and
maintain relationships with suppliers and other third parties;
labor costs and relations; general economic conditions; increases
in operating costs including fuel; competition; inability to meet
cost reduction goals; seasonal fluctuations in our financial
results; an aircraft accident; and changes in laws and regulations.
These risks and others relating to Alaska Air Group are described
in greater detail in Alaska Air Group's SEC filings, including
Alaska Air Group's Annual Report on Form 10-K for the fiscal year
ended December 31, 2015, as well as in other documents filed
by Alaska Air Group with the SEC after the date thereof. Alaska Air
Group makes no commitment to revise or update any forward-looking
statements in order to reflect events or circumstances occurring or
existing after the date any forward-looking statement is made.
Alaska Airlines, together with its regional partners, flies 32
million customers a year to more than 110 cities with an average of
970 daily flights throughout the United
States, including Hawaii,
Canada, Costa Rica and Mexico. With Alaska's 17 global airline partners, customers
can earn and redeem miles to more than 800 destinations worldwide.
Onboard, customers are invited to make the most of their flight
with amenities like power outlets at every seat, streaming
entertainment direct to your device, Wi-Fi and an inspired food and
beverage selection featured on most flights. Alaska Airlines ranked
"Highest in Customer Satisfaction Among Traditional Carriers in
North America" in the J.D. Power
North American Airline Satisfaction Study for nine consecutive
years from 2008 to 2016. Alaska Airlines Mileage Plan also ranked
"Highest in Customer Satisfaction with Airline Loyalty Rewards
Programs" in the J.D. Power Airline Loyalty/Rewards Program
Satisfaction Report for the last three consecutive years. Alaska
Airlines is a subsidiary of Alaska Air Group (NYSE: ALK). Learn
more on the airline's newsroom, blog, alaskaair.com, @AlaskaAir,
facebook.com/alaskaairlines and
linkedin.com/company/alaska-airlines.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
|
Alaska Air Group,
Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six months ended
June 30,
|
(in millions,
except per-share amounts)
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
Operating
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Passenger
|
|
|
|
|
|
|
|
|
|
|
|
Mainline
|
$
|
1,036
|
|
|
$
|
1,019
|
|
|
2
|
%
|
|
$
|
1,963
|
|
|
$
|
1,920
|
|
|
2
|
%
|
Regional
|
227
|
|
|
212
|
|
|
7
|
%
|
|
433
|
|
|
398
|
|
|
9
|
%
|
Total passenger
revenue
|
1,263
|
|
|
1,231
|
|
|
3
|
%
|
|
2,396
|
|
|
2,318
|
|
|
3
|
%
|
Freight and
mail
|
27
|
|
|
30
|
|
|
(10)
|
%
|
|
51
|
|
|
53
|
|
|
(4)
|
%
|
Other -
net
|
204
|
|
|
176
|
|
|
16
|
%
|
|
394
|
|
|
335
|
|
|
18
|
%
|
Total Operating
Revenues
|
1,494
|
|
|
1,437
|
|
|
4
|
%
|
|
2,841
|
|
|
2,706
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Wages and
benefits
|
332
|
|
|
305
|
|
|
9
|
%
|
|
668
|
|
|
611
|
|
|
9
|
%
|
Variable incentive
pay
|
32
|
|
|
32
|
|
|
—
|
%
|
|
64
|
|
|
58
|
|
|
10
|
%
|
Aircraft fuel,
including hedging gains and losses
|
201
|
|
|
261
|
|
|
(23)
|
%
|
|
368
|
|
|
496
|
|
|
(26)
|
%
|
Aircraft
maintenance
|
65
|
|
|
52
|
|
|
25
|
%
|
|
133
|
|
|
115
|
|
|
16
|
%
|
Aircraft
rent
|
26
|
|
|
26
|
|
|
—
|
%
|
|
55
|
|
|
52
|
|
|
6
|
%
|
Landing fees and
other rentals
|
63
|
|
|
66
|
|
|
(5)
|
%
|
|
143
|
|
|
137
|
|
|
4
|
%
|
Contracted
services
|
60
|
|
|
51
|
|
|
18
|
%
|
|
120
|
|
|
102
|
|
|
18
|
%
|
Selling
expenses
|
55
|
|
|
54
|
|
|
2
|
%
|
|
104
|
|
|
107
|
|
|
(3)
|
%
|
Depreciation and
amortization
|
92
|
|
|
79
|
|
|
16
|
%
|
|
180
|
|
|
155
|
|
|
16
|
%
|
Food and beverage
service
|
31
|
|
|
28
|
|
|
11
|
%
|
|
62
|
|
|
53
|
|
|
17
|
%
|
Third-party regional
carrier expense
|
24
|
|
|
17
|
|
|
41
|
%
|
|
47
|
|
|
33
|
|
|
42
|
%
|
Other
|
81
|
|
|
94
|
|
|
(14)
|
%
|
|
175
|
|
|
177
|
|
|
(1)
|
%
|
Special items -
merger costs
|
14
|
|
|
—
|
|
|
NM
|
|
14
|
|
|
—
|
|
|
NM
|
Total Operating
Expenses
|
1,076
|
|
|
1,065
|
|
|
1
|
%
|
|
2,133
|
|
|
2,096
|
|
|
2
|
%
|
Operating
Income
|
418
|
|
|
372
|
|
|
12
|
%
|
|
708
|
|
|
610
|
|
|
16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonoperating
Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
7
|
|
|
6
|
|
|
|
|
13
|
|
|
11
|
|
|
|
Interest
expense
|
(9)
|
|
|
(11)
|
|
|
|
|
(22)
|
|
|
(22)
|
|
|
|
Interest
capitalized
|
7
|
|
|
8
|
|
|
|
|
15
|
|
|
16
|
|
|
|
Other -
net
|
(3)
|
|
|
1
|
|
|
|
|
(2)
|
|
|
1
|
|
|
|
Total Nonoperating
Income (Expense)
|
2
|
|
|
4
|
|
|
|
|
4
|
|
|
6
|
|
|
|
Income Before
Income Tax
|
420
|
|
|
376
|
|
|
|
|
712
|
|
|
616
|
|
|
|
Income tax
expense
|
160
|
|
|
142
|
|
|
|
|
268
|
|
|
233
|
|
|
|
Net
Income
|
$
|
260
|
|
|
$
|
234
|
|
|
|
|
$
|
444
|
|
|
$
|
383
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per
Share:
|
$
|
2.11
|
|
|
$
|
1.80
|
|
|
|
|
$
|
3.58
|
|
|
$
|
2.93
|
|
|
|
Diluted Earnings
Per Share:
|
$
|
2.10
|
|
|
$
|
1.79
|
|
|
|
|
$
|
3.56
|
|
|
$
|
2.91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Used for
Computation:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
123.250
|
|
|
129.236
|
|
|
|
|
123.900
|
|
|
130.173
|
|
|
|
Diluted
|
123.988
|
|
|
130.255
|
|
|
|
|
124.715
|
|
|
131.271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividend
declared per share:
|
$
|
0.275
|
|
|
$
|
0.20
|
|
|
|
|
$
|
0.550
|
|
|
$
|
0.40
|
|
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (unaudited)
|
Alaska Air Group,
Inc.
|
|
|
|
|
(in
millions)
|
June 30,
2016
|
|
December 31,
2015
|
Cash and marketable
securities
|
$
|
1,607
|
|
|
$
|
1,328
|
|
|
|
|
|
Total current
assets
|
2,003
|
|
|
1,663
|
|
Property and
equipment-net
|
4,959
|
|
|
4,802
|
|
Other
assets
|
73
|
|
|
65
|
|
Total
assets
|
7,035
|
|
|
6,530
|
|
|
|
|
|
Air traffic
liability
|
870
|
|
|
669
|
|
Current portion of
long-term debt
|
117
|
|
|
114
|
|
Other current
liabilities
|
1,074
|
|
|
1,022
|
|
Current
liabilities
|
2,061
|
|
|
1,805
|
|
Long-term
debt
|
509
|
|
|
569
|
|
Other liabilities and
credits
|
1,838
|
|
|
1,745
|
|
Shareholders'
equity
|
2,627
|
|
|
2,411
|
|
Total liabilities
and shareholders' equity
|
$
|
7,035
|
|
|
$
|
6,530
|
|
|
|
|
|
Debt-to-capitalization ratio, adjusted for operating
leases(a)
|
25%:75%
|
|
|
27%:73%
|
|
|
|
|
|
Number of common
shares outstanding
|
123.080
|
|
|
125.175
|
|
(a) Calculated
using the present value of remaining aircraft lease
payments.
|
OPERATING
STATISTICS SUMMARY (unaudited)
|
Alaska Air Group,
Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
Consolidated
Operating Statistics:(a)
|
|
|
|
|
|
|
|
|
|
|
|
Revenue passengers
(000)
|
8,647
|
|
8,024
|
|
7.8%
|
|
16,482
|
|
15,340
|
|
7.4%
|
RPMs (000,000)
"traffic"
|
9,397
|
|
8,451
|
|
11.2%
|
|
17,968
|
|
16,173
|
|
11.1%
|
ASMs (000,000)
"capacity"
|
11,062
|
|
9,949
|
|
11.2%
|
|
21,515
|
|
19,206
|
|
12.0%
|
Load
factor
|
84.9%
|
|
84.9%
|
|
—pts
|
|
83.5%
|
|
84.2%
|
|
(0.7)pts
|
Yield
|
13.44¢
|
|
14.56¢
|
|
(7.7)%
|
|
13.34¢
|
|
14.33¢
|
|
(6.9)%
|
PRASM
|
11.42¢
|
|
12.37¢
|
|
(7.7)%
|
|
11.14¢
|
|
12.07¢
|
|
(7.7)%
|
RASM
|
13.51¢
|
|
14.44¢
|
|
(6.4)%
|
|
13.21¢
|
|
14.09¢
|
|
(6.2)%
|
CASM excluding fuel
and special items(b)
|
7.78¢
|
|
8.08¢
|
|
(3.7)%
|
|
8.14¢
|
|
8.33¢
|
|
(2.3)%
|
Economic fuel cost
per gallon(b)
|
$1.53
|
|
$2.12
|
|
(27.8)%
|
|
$1.41
|
|
$2.05
|
|
(31.2%)
|
Fuel gallons
(000,000)
|
138
|
|
126
|
|
9.5%
|
|
270
|
|
245
|
|
10.2%
|
ASM's per
gallon
|
80.2
|
|
79.0
|
|
1.5%
|
|
79.7
|
|
78.4
|
|
1.7%
|
Average number of
full-time equivalent employees (FTE)
|
14,470
|
|
13,793
|
|
4.9%
|
|
14,414
|
|
13,534
|
|
6.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
Mainline Operating
Statistics:
|
|
|
|
|
|
|
|
|
|
|
|
Revenue passengers
(000)
|
6,282
|
|
5,787
|
|
8.6%
|
|
11,925
|
|
11,022
|
|
8.2%
|
RPMs (000,000)
"traffic"
|
8,456
|
|
7,662
|
|
10.4%
|
|
16,172
|
|
14,657
|
|
10.3%
|
ASMs (000,000)
"capacity"
|
9,875
|
|
8,984
|
|
9.9%
|
|
19,229
|
|
17,330
|
|
11.0%
|
Load
factor
|
85.6%
|
|
85.3%
|
|
0.3pts
|
|
84.1%
|
|
84.6%
|
|
(0.5)pts
|
Yield
|
12.25¢
|
|
13.29¢
|
|
(7.8)%
|
|
12.14¢
|
|
13.10¢
|
|
(7.3)%
|
PRASM
|
10.49¢
|
|
11.34¢
|
|
(7.5)%
|
|
10.21¢
|
|
11.08¢
|
|
(7.9)%
|
RASM
|
12.61¢
|
|
13.40¢
|
|
(5.9)%
|
|
12.31¢
|
|
13.09¢
|
|
(6.0)%
|
CASM excluding fuel
and special items(b)
|
6.88¢
|
|
7.17¢
|
|
(4.0)%
|
|
7.18¢
|
|
7.41¢
|
|
(3.1)%
|
Economic fuel cost
per gallon(b)
|
$1.52
|
|
$2.12
|
|
(28.3)%
|
|
$1.40
|
|
$2.05
|
|
(31.7%)
|
Fuel gallons
(000,000)
|
118
|
|
110
|
|
7.3%
|
|
231
|
|
213
|
|
8.5%
|
ASM's per
gallon
|
83.7
|
|
81.7
|
|
2.4%
|
|
83.2
|
|
81.4
|
|
2.2%
|
Average number of
FTE's
|
11,261
|
|
10,726
|
|
5.0%
|
|
11,192
|
|
10,553
|
|
6.1%
|
Aircraft
utilization
|
10.8
|
|
11.1
|
|
(2.7%)
|
|
10.7
|
|
10.8
|
|
(0.9)%
|
Average aircraft
stage length
|
1,177
|
|
1,191
|
|
(1.2%)
|
|
1,195
|
|
1,195
|
|
—%
|
Operating
fleet
|
152
|
|
140
|
|
12 a/c
|
|
152
|
|
140
|
|
12 a/c
|
|
|
|
|
|
|
|
|
|
|
|
|
Regional Operating
Statistics:(c)
|
|
|
|
|
|
|
|
|
|
|
|
Revenue passengers
(000)
|
2,365
|
|
2,237
|
|
5.7%
|
|
4,558
|
|
4,318
|
|
5.6%
|
RPMs (000,000)
"traffic"
|
941
|
|
789
|
|
19.3%
|
|
1,796
|
|
1,516
|
|
18.5%
|
ASMs (000,000)
"capacity"
|
1,187
|
|
965
|
|
23.0%
|
|
2,287
|
|
1,876
|
|
21.9%
|
Load
factor
|
79.3%
|
|
81.8%
|
|
(2.5)pts
|
|
78.5%
|
|
80.8%
|
|
(2.3)pts
|
Yield
|
24.17¢
|
|
26.92¢
|
|
(10.2)%
|
|
24.13¢
|
|
26.28¢
|
|
(8.2)%
|
PRASM
|
19.16¢
|
|
21.99¢
|
|
(12.9)%
|
|
18.95¢
|
|
21.25¢
|
|
(10.8)%
|
Operating
fleet
|
69
|
|
63
|
|
6 a/c
|
|
69
|
|
63
|
|
6 a/c
|
|
|
(a)
|
Except for full-time
equivalent employees, data includes information related to
third-party regional capacity purchase flying
arrangements.
|
(b)
|
See a reconciliation
of operating expenses excluding fuel and special items, a
reconciliation of economic fuel costs, and Note A in the
accompanying pages, for a discussion of why these measures may be
important to investors.
|
(c)
|
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
June 30, 2016
|
|
Alaska
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Mainline
|
|
Regional
|
|
Horizon
|
|
Parent &
Consolidating(a)
|
|
Air Group
Adjusted(b)
|
|
Special
Items(c)
|
|
Consolidated
|
Operating
revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mainline
|
$
|
1,036
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,036
|
|
|
$
|
—
|
|
|
$
|
1,036
|
|
Regional
|
—
|
|
|
227
|
|
|
—
|
|
|
—
|
|
|
227
|
|
|
—
|
|
|
227
|
|
Total passenger
revenues
|
1,036
|
|
|
227
|
|
|
—
|
|
|
—
|
|
|
1,263
|
|
|
—
|
|
|
1,263
|
|
CPA
revenues
|
—
|
|
|
—
|
|
|
110
|
|
|
(110)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Freight and
mail
|
26
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
27
|
|
|
—
|
|
|
27
|
|
Other-net
|
184
|
|
|
19
|
|
|
1
|
|
|
—
|
|
|
204
|
|
|
—
|
|
|
204
|
|
Total operating
revenues
|
1,246
|
|
|
247
|
|
|
111
|
|
|
(110)
|
|
|
1,494
|
|
|
—
|
|
|
1,494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses,
excluding fuel
|
679
|
|
|
192
|
|
|
101
|
|
|
(111)
|
|
|
861
|
|
|
14
|
|
|
875
|
|
Economic
fuel
|
180
|
|
|
31
|
|
|
—
|
|
|
—
|
|
|
211
|
|
|
(10)
|
|
|
201
|
|
Total operating
expenses
|
859
|
|
|
223
|
|
|
101
|
|
|
(111)
|
|
|
1,072
|
|
|
4
|
|
|
1,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonoperating
income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
6
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
Interest
expense
|
(4)
|
|
|
—
|
|
|
(4)
|
|
|
(1)
|
|
|
(9)
|
|
|
—
|
|
|
(9)
|
|
Other
|
3
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
4
|
|
|
—
|
|
|
4
|
|
Total Nonoperating
income (expense)
|
5
|
|
|
—
|
|
|
(3)
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
Income (loss)
before income tax
|
$
|
392
|
|
|
$
|
24
|
|
|
$
|
7
|
|
|
$
|
1
|
|
|
$
|
424
|
|
|
$
|
(4)
|
|
|
$
|
420
|
|
|
|
|
|
|
Three Months Ended
June 30, 2015
|
|
Alaska
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
Mainline
|
|
Regional
|
|
Horizon
|
|
Parent &
Consolidating(a)
|
|
Air Group
Adjusted(b)
|
|
Special
Items(c)
|
|
Consolidated
|
Operating
revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mainline
|
$
|
1,019
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,019
|
|
|
$
|
—
|
|
|
$
|
1,019
|
|
Regional
|
—
|
|
|
212
|
|
|
—
|
|
|
—
|
|
|
212
|
|
|
—
|
|
|
212
|
|
Total passenger
revenues
|
1,019
|
|
|
212
|
|
|
—
|
|
|
—
|
|
|
1,231
|
|
|
—
|
|
|
1,231
|
|
CPA
revenues
|
—
|
|
|
—
|
|
|
99
|
|
|
(99)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Freight and
mail
|
28
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
30
|
|
Other-net
|
156
|
|
|
19
|
|
|
1
|
|
|
—
|
|
|
176
|
|
|
—
|
|
|
176
|
|
Total operating
revenues
|
1,203
|
|
|
233
|
|
|
100
|
|
|
(99)
|
|
|
1,437
|
|
|
—
|
|
|
1,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses,
excluding fuel
|
645
|
|
|
169
|
|
|
90
|
|
|
(100)
|
|
|
804
|
|
|
—
|
|
|
804
|
|
Economic
fuel
|
232
|
|
|
35
|
|
|
—
|
|
|
—
|
|
|
267
|
|
|
(6)
|
|
|
261
|
|
Total operating
expenses
|
877
|
|
|
204
|
|
|
90
|
|
|
(100)
|
|
|
1,071
|
|
|
(6)
|
|
|
1,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonoperating
income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
5
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
6
|
|
|
—
|
|
|
6
|
|
Interest
expense
|
(7)
|
|
|
—
|
|
|
(1)
|
|
|
(3)
|
|
|
(11)
|
|
|
—
|
|
|
(11)
|
|
Other
|
7
|
|
|
—
|
|
|
(1)
|
|
|
3
|
|
|
9
|
|
|
—
|
|
|
9
|
|
Total Nonoperating
income (expense)
|
5
|
|
|
—
|
|
|
(2)
|
|
|
1
|
|
|
4
|
|
|
—
|
|
|
4
|
|
Income (loss)
before income tax
|
$
|
331
|
|
|
$
|
29
|
|
|
$
|
8
|
|
|
$
|
2
|
|
|
$
|
370
|
|
|
$
|
6
|
|
|
$
|
376
|
|
|
|
|
|
|
Six Months Ended
June 30, 2016
|
|
Alaska
|
|
|
|
|
|
|
|
|
|
|
|
Mainline
|
|
Regional
|
|
Horizon
|
|
Parent &
Consolidating(a)
|
|
Air Group
Adjusted(b)
|
|
Special
Items(c)
|
|
Consolidated
|
Operating
revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mainline
|
1,963
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,963
|
|
|
$
|
—
|
|
|
$
|
1,963
|
|
Regional
|
—
|
|
|
433
|
|
|
—
|
|
|
—
|
|
|
433
|
|
|
—
|
|
|
433
|
|
Total passenger
revenues
|
1,963
|
|
|
433
|
|
|
—
|
|
|
—
|
|
|
2,396
|
|
|
—
|
|
|
2,396
|
|
CPA
revenues
|
—
|
|
|
—
|
|
|
213
|
|
|
(213)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Freight and
mail
|
49
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
51
|
|
|
—
|
|
|
51
|
|
Other -
net
|
356
|
|
|
36
|
|
|
2
|
|
|
—
|
|
|
394
|
|
|
—
|
|
|
394
|
|
Total operating
revenues
|
2,368
|
|
|
471
|
|
|
215
|
|
|
(213)
|
|
|
2,841
|
|
|
—
|
|
|
2,841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses,
excluding fuel
|
1,380
|
|
|
378
|
|
|
206
|
|
|
(213)
|
|
|
1,751
|
|
|
14
|
|
|
1,765
|
|
Economic
fuel
|
324
|
|
|
56
|
|
|
—
|
|
|
—
|
|
|
380
|
|
|
(12)
|
|
|
368
|
|
Total operating
expenses
|
1,704
|
|
|
434
|
|
|
206
|
|
|
(213)
|
|
|
2,131
|
|
|
2
|
|
|
2,133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonoperating
income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
12
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
13
|
|
Interest
expense
|
(16)
|
|
|
—
|
|
|
(5)
|
|
|
(1)
|
|
|
(22)
|
|
|
—
|
|
|
(22)
|
|
Other
|
10
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
13
|
|
|
—
|
|
|
13
|
|
Total Nonoperating
income (expense)
|
6
|
|
|
—
|
|
|
(4)
|
|
|
2
|
|
|
4
|
|
|
—
|
|
|
4
|
|
Income (loss)
before income tax
|
$
|
670
|
|
|
$
|
37
|
|
|
$
|
5
|
|
|
$
|
2
|
|
|
$
|
714
|
|
|
$
|
(2)
|
|
|
$
|
712
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30, 2015
|
|
Alaska
|
|
|
|
|
|
|
|
|
|
|
|
Mainline
|
|
Regional
|
|
Horizon
|
|
Parent &
Consolidating()
|
|
Air Group
Adjusted(b)
|
|
Special
Items(c)
|
|
Consolidated
|
Operating
revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mainline
|
$
|
1,920
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,920
|
|
|
$
|
—
|
|
|
$
|
1,920
|
|
Regional
|
—
|
|
|
398
|
|
|
—
|
|
|
—
|
|
|
398
|
|
|
—
|
|
|
398
|
|
Total passenger
revenues
|
1,920
|
|
|
398
|
|
|
—
|
|
|
—
|
|
|
2,318
|
|
|
—
|
|
|
2,318
|
|
CPA
revenues
|
—
|
|
|
—
|
|
|
198
|
|
|
(198)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Freight and
mail
|
50
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
53
|
|
|
—
|
|
|
53
|
|
Other -
net
|
298
|
|
|
35
|
|
|
2
|
|
|
—
|
|
|
335
|
|
|
—
|
|
|
335
|
|
Total operating
revenues
|
2,268
|
|
|
436
|
|
|
200
|
|
|
(198)
|
|
|
2,706
|
|
|
—
|
|
|
2,706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses,
excluding fuel
|
1,284
|
|
|
333
|
|
|
181
|
|
|
(198)
|
|
|
1,600
|
|
|
—
|
|
|
1,600
|
|
Economic
fuel
|
436
|
|
|
66
|
|
|
—
|
|
|
—
|
|
|
502
|
|
|
(6)
|
|
|
496
|
|
Total operating
expenses
|
1,720
|
|
|
399
|
|
|
181
|
|
|
(198)
|
|
|
2,102
|
|
|
(6)
|
|
|
2,096
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonoperating
income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
10
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
11
|
|
|
—
|
|
|
11
|
|
Interest
expense
|
(14)
|
|
|
—
|
|
|
(5)
|
|
|
(3)
|
|
|
(22)
|
|
|
—
|
|
|
(22)
|
|
Other
|
14
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
17
|
|
|
—
|
|
|
17
|
|
Total Nonoperating
income (expense)
|
10
|
|
|
—
|
|
|
(5)
|
|
|
1
|
|
|
6
|
|
|
—
|
|
|
6
|
|
Income (loss)
before income tax
|
$
|
558
|
|
|
$
|
37
|
|
|
$
|
14
|
|
|
$
|
1
|
|
|
$
|
610
|
|
|
$
|
6
|
|
|
$
|
616
|
|
|
|
(a)
|
Includes
consolidating entries, Parent Company, and other immaterial
business units.
|
(b)
|
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
in the accompanying pages for further information.
|
(c)
|
Includes accounting
adjustments related to mark-to-market fuel-hedge accounting
charges, and other special items described previously.
|
Alaska Air Group,
Inc.
|
|
|
|
|
|
CASM EXCLUDING
FUEL RECONCILIATION (unaudited)
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30, 2016
|
(in
cents)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Consolidated:
|
|
|
|
|
|
|
|
CASM
|
9.73
|
¢
|
|
10.70
|
¢
|
|
9.91
|
¢
|
|
10.91
|
¢
|
Less the following
components:
|
|
|
|
|
|
|
|
Aircraft fuel,
including hedging gains and losses
|
1.82
|
|
|
2.62
|
|
|
1.71
|
|
|
2.58
|
|
Special items -
merger costs
|
0.13
|
|
|
—
|
|
|
0.06
|
¢
|
|
—
|
|
CASM excluding
fuel and special items
|
7.78
|
¢
|
|
8.08
|
¢
|
|
8.14
|
¢
|
|
8.33
|
¢
|
|
|
|
|
|
|
|
|
Mainline:
|
|
|
|
|
|
|
|
CASM
|
8.60
|
¢
|
|
9.70
|
¢
|
|
8.80
|
¢
|
|
9.89
|
¢
|
Less the following
components:
|
|
|
|
|
|
|
|
Aircraft fuel,
including hedging gains and losses
|
1.72
|
|
|
2.53
|
|
|
1.62
|
|
|
2.48
|
|
CASM excluding
fuel and special items
|
6.88
|
¢
|
|
7.17
|
¢
|
|
7.18
|
¢
|
|
7.41
|
¢
|
FUEL
RECONCILIATIONS (unaudited)
|
|
Three Months Ended
June 30,
|
|
2016
|
|
2015
|
(in millions,
except for per-gallon amounts)
|
Dollars
|
|
Cost/Gallon
|
|
Dollars
|
|
Cost/Gallon
|
Raw or "into-plane"
fuel cost
|
$
|
207
|
|
|
$
|
1.50
|
|
|
$
|
262
|
|
|
$
|
2.08
|
|
Losses on settled
hedges
|
4
|
|
|
0.03
|
|
|
5
|
|
|
0.04
|
|
Consolidated
economic fuel expense
|
211
|
|
|
1.53
|
|
|
267
|
|
|
2.12
|
|
Mark-to-market fuel
hedge adjustment
|
(10)
|
|
|
(0.07)
|
|
|
(6)
|
|
|
(0.05)
|
|
GAAP fuel
expense
|
$
|
201
|
|
|
$
|
1.46
|
|
|
$
|
261
|
|
|
$
|
2.07
|
|
Fuel
gallons
|
138
|
|
|
|
|
126
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
2016
|
|
2015
|
(in millions,
except for per gallon amounts)
|
Dollars
|
|
Cost/Gallon
|
|
Dollars
|
|
Cost/Gallon
|
Raw or "into-plane"
fuel cost
|
$
|
372
|
|
|
$
|
1.38
|
|
|
$
|
492
|
|
|
$
|
2.01
|
|
Losses on settled
hedges
|
8
|
|
|
0.03
|
|
|
10
|
|
|
0.04
|
|
Consolidated
economic fuel expense
|
$
|
380
|
|
|
$
|
1.41
|
|
|
$
|
502
|
|
|
$
|
2.05
|
|
Mark-to-market fuel
hedge adjustment
|
(12)
|
|
|
(0.04)
|
|
|
(6)
|
|
|
(0.02)
|
|
GAAP fuel
expense
|
$
|
368
|
|
|
$
|
1.37
|
|
|
$
|
496
|
|
|
$
|
2.03
|
|
Fuel
gallons
|
270
|
|
|
|
|
245
|
|
|
|
Note A: Pursuant to Regulation G, we have provided
reconciliations 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 and 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 term, 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.
- 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 tax and CASM excluding fuel, and
other special items, 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 mark-to-market
hedging adjustments or Virgin America merger-related costs, 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 separate
management teams primarily in operational roles. 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
Free Cash Flow - total operating cash flow generated less
cash paid for capital expenditures
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-second-quarter-2016-results-300301895.html
SOURCE Alaska Air Group