Third Quarter Financial and Other Highlights: - Net income,
excluding special items, was $83.0 million, or $2.33 per diluted
share, compared to net income excluding special items of $39.9
million, or $1.10 per diluted share, in the third quarter of 2008.
This compares to a First Call mean estimate of $2.26 per share. -
Net income under Generally Accepted Accounting Principles (GAAP) of
$87.6 million, or $2.46 per diluted share, compared to a net loss
of $86.5 million, or $2.40 per diluted share, in 2008. - More than
$1.2 billion in unrestricted cash and marketable securities as of
Sept. 30, 2009. - Alaska was No. 1 in U.S. Department of
Transportation on-time performance in each month from April to
August among major network carriers. Alaska also achieved
unofficial on-time performance of 90 percent in September, while
Horizon Air's on-time performance for September was 91.3 percent.
SEATTLE, Oct. 22 /PRNewswire-FirstCall/ -- Alaska Air Group, Inc.
(NYSE: ALK) today reported third quarter 2009 net income of $87.6
million, or $2.46 per diluted share, compared to a net loss of
$86.5 million, or $2.40 per diluted share, in the third quarter of
2008. Excluding mark-to-market fuel hedge gains of $7.3 million
($4.6 million after tax or $0.13 per diluted share), the company
reported net income of $83.0 million, or $2.33 per diluted share,
compared to net income of $39.9 million, or $1.10 per diluted
share, excluding mark-to-market fuel hedge losses and other special
items in the third quarter of 2008. "Our work to reduce capacity to
better match demand, redeploy aircraft into promising new markets,
and achieve record operational reliability contributed to our best
quarterly financial performance in many years," said Bill Ayer,
Alaska Air Group's chairman and chief executive officer. "My thanks
to our people for taking excellent care of customers and for their
relentless efforts to improve our business." The following table
reconciles the company's adjusted net income and earnings per
diluted share (EPS) during the third quarters of 2009 and 2008 to
the most directly related amounts as reported in accordance with
GAAP (in millions except per-share amounts): Three months ended
Sept. 30, ----------------------------------------- 2009 2008 ----
---- Diluted Diluted Dollars EPS Dollars EPS
--------------------------- -------- ------- -------- ------- Net
income and diluted EPS, excluding special items $83.0 $2.33 $39.9
$1.10 Change in Mileage Plan terms, net of tax --- --- 26.5 0.73
Restructuring charges, net of tax --- --- (2.3) (0.06) Fleet
transition costs - MD-80, net of tax --- --- (13.5) (0.37) Fleet
transition costs - CRJ-700, net of tax --- --- (0.4) (0.01)
Adjustments to reflect the timing of gain recognition resulting
from mark-to-market fuel-hedge accounting, net of tax 4.6 0.13
(136.7) (3.79) --- ---- ------- ----- Reported GAAP amounts $87.6
$2.46 $(86.5) $(2.40) ===== ===== ======= ====== Financial and
statistical data for Alaska Airlines and Horizon Air, 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 at the end of this release. A conference call regarding
the third quarter 2009 results will be simulcast via the Internet
at 8:30 a.m. Pacific time on Oct. 22, 2009. It can be accessed
through the company's Web site at alaskaair.com/investors. For
those unable to listen to the live broadcast, a replay will be
available after the conclusion of the call at
alaskaair.com/investors. 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 contains 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
Dec. 31, 2008. Some of these risks include current economic
conditions, increases in operating costs including fuel,
competition, labor costs and relations, our significant
indebtedness, inability to meet cost reduction goals, terrorist
attacks, seasonal fluctuations in our financial results, an
aircraft accident, changes in laws and regulations, and government
fees and taxes. 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 and Horizon Air, subsidiaries
of Alaska Air Group (NYSE: ALK), together serve more than 90 cities
through an expansive network in Alaska, the Lower 48, Hawaii,
Canada and Mexico. Alaska Airlines ranked "Highest in Customer
Satisfaction Among Traditional Network Carriers" in the J.D. Power
and Associates 2008 and 2009 North America Airline Satisfaction
Studies(SM). For reservations, visit alaskaair.com. For more news
and information, visit the Alaska Airlines/Horizon Air Newsroom at
alaskaair.com/newsroom. Alaska Air Group, Inc. CONSOLIDATED
STATEMENTS OF OPERATIONS (unaudited) Three Months Nine Months Ended
Ended September 30, September 30, -------------- ----------------
(in millions, except per share amounts) 2009 2008 2009 2008 ----
---- ---- ---- Operating Revenues: Passenger $884.8 $952.8 $2,326.1
$2,592.0 Freight and mail 27.7 30.5 72.3 80.4 Other - net 54.9 39.6
155.3 120.8 Change in Mileage Plan terms - 42.3 - 42.3 --- ---- ---
---- Total Operating Revenues 967.4 1,065.2 2,553.7 2,835.5 -----
------- ------- ------- Operating Expenses: Wages and benefits
246.2 232.1 739.3 711.2 Variable incentive pay 24.0 6.3 52.2 15.0
Aircraft fuel, including hedging gains and losses 199.5 575.6 485.6
1,039.6 Aircraft maintenance 49.7 47.4 169.0 159.6 Aircraft rent
38.3 40.2 115.4 126.1 Landing fees and other rentals 57.3 56.8
165.9 169.7 Contracted services 37.4 40.2 112.6 128.3 Selling
expenses 37.0 41.7 97.3 120.3 Depreciation and amortization 55.6
52.1 162.3 152.9 Food and beverage service 12.7 13.5 36.7 39.2
Other 51.1 52.7 158.2 171.4 New pilot contract transition costs - -
35.8 - Restructuring charges - 3.7 - 3.7 Fleet transition costs -
MD-80 - 21.5 - 47.5 Fleet transition costs - CRJ-700 - 0.7 - 6.8
Fleet transition costs - Q200 (1.2) 0.7 8.8 9.7 ---- --- --- ---
Total Operating Expenses 807.6 1,185.2 2,339.1 2,901.0 -----
------- ------- ------- Operating Income (Loss) 159.8 (120.0) 214.6
(65.5) ----- ------ ----- ----- Nonoperating Income (Expense):
Interest income 8.3 10.7 24.4 31.5 Interest expense (25.9) (25.9)
(77.8) (74.3) Interest capitalized 1.4 5.9 6.0 18.5 Other - net
(0.8) (3.7) (6.3) (3.4) ---- ---- ---- ---- (17.0) (13.0) (53.7)
(27.7) ----- ----- ----- ----- Income (loss) before income tax
142.8 (133.0) 160.9 (93.2) Income tax expense (benefit) 55.2 (46.5)
63.4 (32.5) ---- ----- ---- ----- Net Income (Loss) $87.6 $(86.5)
$97.5 $(60.7) ===== ====== ===== ====== Basic Earnings (Loss) Per
Share: $2.48 $(2.40) $2.71 $(1.67) Diluted Earnings (Loss) Per
Share: $2.46 $(2.40) $2.69 $(1.67) Shares Used for Computation:
Basic 35.275 36.069 35.981 36.383 Diluted 35.681 36.069 36.292
36.383 Alaska Air Group, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited) ------------- ------------ September 30, December 31,
(in millions) 2009 2008 ------------- ------------- ------------
Cash and marketable securities $1,230 $1,077 ====== ====== Total
current assets 1,686 1,509 Property and equipment-net 3,136 3,168
Other assets 184 159 --- --- Total assets $5,006 $4,836 ======
====== Current liabilities $1,282 $1,361 Long-term debt 1,658 1,596
Other liabilities and credits 1,292 1,217 Shareholders' equity 774
662 --- --- Total liabilities and shareholders' equity $5,006
$4,836 ====== ====== Debt to Capitalization, adjusted for operating
leases 78%:22% 81%:19% ====== ====== Number of common shares
outstanding 35.251 36.275 ====== ====== Air Group Net Income (Loss)
and EPS Reconciliation:
--------------------------------------------------- The following
table reconciles Alaska Air Group, Inc.'s net income (loss) and
amounts per share during 2009 and 2008 excluding certain noted
items to the most directly related amounts as reported in
accordance with GAAP (in millions except per share amounts): Three
Months Ended September 30, -------------------------------- 2009
2008 ------ ------ Dollars Diluted EPS Dollars Diluted EPS -------
----------- ------- ----------- Net income and diluted EPS,
excluding the items noted below $83.0 $2.33 $39.9 $1.10 Change in
Mileage Plan terms, net of tax - - 26.5 0.73 Restructuring charges,
net of tax - - (2.3) (0.06) Fleet transition costs - MD-80, net of
tax - - (13.5) (0.37) Fleet transition costs - CRJ-700, net of tax
- - (0.4) (0.01) Adjustments to reflect the timing of gain or loss
recognition resulting from mark-to-market fuel hedge accounting,
net of tax 4.6 0.13 (136.7) (3.79) --- ---- ------ ----- Reported
GAAP amounts $87.6 $2.46 $(86.5) $(2.40) ===== ===== ====== ======
Nine Months Ended September 30, --------------------------------
2009 2008 ------ ------ Dollars Diluted EPS Dollars Diluted EPS
------- ----------- ------- ----------- Net income (loss) and
diluted EPS, excluding the items noted below $84.1 $2.32 $(12.0)
$(0.33) Change in Mileage Plan terms, net of tax - - 26.5 0.73 New
pilot contract transition costs, net of tax (22.3) (0.61) - -
Restructuring charges, net of tax - - (2.3) (0.06) Fleet transition
costs - MD-80, net of tax - - (29.8) (0.82) Fleet transition costs
- CRJ-700, net of tax - - (4.2) (0.12) Adjustments to reflect the
timing of gain or loss recognition resulting from mark-to-market
fuel hedge accounting, net of tax 35.7 0.98 (38.9) (1.07) ---- ----
----- ----- Reported GAAP amounts $97.5 $2.69 $(60.7) $(1.67) =====
===== ====== ====== Alaska Airlines Financial and Statistical Data
Three Months Ended Nine Months Ended September 30, September 30,
---------------------- ------------------------ Financial Data % %
(in millions): 2009 2008 Change 2009 2008 Change ---- ---- -------
---- ---- ------- Operating Revenues: Passenger $702.0 $751.2 (6.5)
$1,844.3 $2,041.2 (9.6) Freight and mail 26.5 29.2 (9.2) 69.0 77.1
(10.5) Other - net 48.4 33.5 44.5 136.5 101.2 34.9 Change in
Mileage Plan terms - 42.3 NM - 42.3 NM --- ---- --- ---- Total
mainline operating revenues 776.9 856.2 (9.3) 2,049.8 2,261.8 (9.4)
Passenger - purchased capacity 81.9 85.7 (4.4) 211.4 233.9 (9.6)
---- ---- ----- ----- Total Operating Revenues 858.8 941.9 (8.8)
2,261.2 2,495.7 (9.4) ----- ----- ------- ------- Operating
Expenses: Wages and benefits 199.1 182.5 9.1 594.9 558.9 6.4
Variable incentive pay 20.8 4.9 324.5 44.0 10.8 307.4 Aircraft
fuel, including hedging gains and losses 166.6 479.1 (65.2) 405.9
864.0 (53.0) Aircraft maintenance 36.5 32.6 12.0 129.4 112.1 15.4
Aircraft rent 27.2 26.3 3.4 81.8 82.4 (0.7) Landing fees and other
rentals 43.0 42.3 1.7 124.4 126.9 (2.0) Contracted services 29.7
31.9 (6.9) 88.6 100.5 (11.8) Selling expenses 29.4 33.1 (11.2) 76.8
95.6 (19.7) Depreciation and amortization 45.1 42.8 5.4 132.6 123.2
7.6 Food and beverage service 12.0 12.8 (6.3) 34.9 37.1 (5.9) Other
38.0 41.0 (7.3) 119.3 130.2 (8.4) New pilot contract transition
costs - - NM 35.8 - NM Restructuring charges - 3.7 NM - 3.7 NM
Fleet transition costs - MD-80 - 21.5 NM - 47.5 NM --- ---- ---
---- Total mainline operating expenses 647.4 954.5 (32.2) 1,868.4
2,292.9 (18.5) ----- ----- ------- ------- Purchased capacity costs
74.7 85.6 (12.7) 206.3 246.8 (16.4) ---- ---- ----- ----- Total
Operating Expenses 722.1 1,040.1 (30.6) 2,074.7 2,539.7 (18.3)
----- ------- ------- ------- Operating Income (Loss) 136.7 (98.2)
186.5 (44.0) ----- ----- ----- ----- Interest income 9.6 12.8 29.2
38.2 Interest expense (22.4) (23.5) (67.5) (67.5) Interest
capitalized 1.4 4.8 5.7 16.1 Other - net (0.5) (3.3) (5.3) (2.7)
---- ---- ---- ---- (11.9) (9.2) (37.9) (15.9) ----- ---- -----
----- Income (Loss) Before Income Tax $124.8 $(107.4) $148.6
$(59.9) ====== ======= ====== ====== Mainline Operating Statistics:
Revenue passengers (000) 4,240 4,532 (6.4) 11,796 13,037 (9.5) RPMs
(000,000) "traffic" 5,020 5,012 0.2 13,812 14,410 (4.1) ASMs
(000,000) "capacity" 6,097 6,306 (3.3) 17,469 18,628 (6.2)
Passenger load factor 82.3% 79.5% 2.8pts 79.1% 77.4% 1.7pts Yield
per passenger mile (in cents) 13.98 14.99 (6.7) 13.35 14.17 (5.8)
Operating revenue per ASM "RASM" (in cents) 12.74 13.58 (6.2) 11.73
12.14 (3.4) Change in Mileage Plan terms per ASM (in cents) 0.00
0.67 NM 0.00 0.23 NM ---- ---- ---- ---- RASM excluding change in
Mileage Plan terms (in cents) 12.74 12.91 (1.3) 11.73 11.91 (1.5)
Passenger revenue per ASM (in cents) 11.51 11.91 (3.4) 10.56 10.96
(3.6) Operating expense per ASM (in cents) 10.62 15.14 (29.9) 10.70
12.31 (13.1) Operating expense per ASM excluding fuel,
restructuring charges and fleet transition costs (in cents) (a)
7.89 7.14 10.5 8.17 7.40 10.4 GAAP fuel cost per gallon $2.07 $5.57
(62.8) $1.77 $3.34 (47.0) Economic fuel cost per gallon (b) $2.15
$3.47 (38.0) $1.98 $3.14 (36.9) Fuel gallons (000,000) 80.1 86.0
(6.9) 229.9 258.3 (11.0) Average number of full-time equivalent
employees 9,002 9,594 (6.2) 8,987 9,785 (8.2) Aircraft utilization
(blk hrs/day) 9.9 10.8 (8.3) 9.9 10.8 (8.3) Average aircraft stage
length (miles) 1,044 981 6.4 1,027 975 5.3 Operating fleet at
period-end 116 110 6 a/c 116 110 6 a/c Regional Operating
Statistics: RPMs (000,000) 298 304 (2.0) 777 873 (11.0) ASMs
(000,000) 383 391 (2.0) 1,058 1,153 (8.2) Passenger load factor
77.8% 77.7% 0.1pts 73.4% 75.7% (2.3)pts Yield per passenger mile
(in cents) 27.48 28.19 (2.5) 27.21 26.79 1.6 Operating revenue per
ASM (in cents) 21.38 21.92 (2.5) 19.98 20.29 (1.5) Operating
expenses per ASM (in cents) 19.50 21.89 (10.9) 19.50 21.41 (8.9) NM
= Not Meaningful (a) See page 9 for a reconciliation of these
non-GAAP measures and a discussion about why these measures may be
important to investors. (b) See page 11 for a reconciliation of
economic fuel cost. Horizon Air Financial and Statistical Data
Three Months Ended Nine Months Ended September 30, September 30,
---------------------- ------------------------- Financial Data (in
millions): 2009 2008 % Change 2009 2008 % Change ---- ---- --------
---- ---- --------- Operating Revenues: Passenger - brand flying
$105.4 $120.3 (12.4) $283.7 $330.7 (14.2) Passenger - Alaska
capacity purchase arrangement 69.9 81.1 (13.8) 191.2 231.2 (17.3)
---- ---- ----- ----- Total passenger revenue 175.3 201.4 (13.0)
474.9 561.9 (15.5) Freight and mail 0.7 0.8 (12.5) 2.0 2.1 (4.8)
Other - net 2.2 1.9 15.8 6.0 6.2 (3.2) --- --- --- --- Total
Operating Revenues 178.2 204.1 (12.7) 482.9 570.2 (15.3) -----
----- ----- ----- Operating Expenses: Wages and benefits 44.4 47.9
(7.3) 137.0 147.2 (6.9) Variable incentive pay 3.2 1.4 128.6 8.2
4.2 95.2 Aircraft fuel, including hedging gains and losses 32.9
96.5 (65.9) 79.7 175.6 (54.6) Aircraft maintenance 13.2 14.8 (10.8)
39.6 47.5 (16.6) Aircraft rent 11.1 13.9 (20.1) 33.6 43.7 (23.1)
Landing fees and other rentals 14.6 14.7 (0.7) 42.4 43.6 (2.8)
Contracted services 8.4 7.1 18.3 23.8 22.0 8.2 Selling expenses 7.6
8.6 (11.6) 20.5 24.7 (17.0) Depreciation and amortization 10.2 9.0
13.3 28.8 28.8 - Food and beverage service 0.7 0.7 - 1.8 2.1 (14.3)
Other 9.4 9.7 (3.1) 29.0 33.7 (13.9) Fleet transition costs -
CRJ-700 - 0.7 NM - 6.8 NM Fleet transition costs - Q200 (1.2) 0.7
NM 8.8 9.7 NM ---- --- --- --- Total Operating Expenses 154.5 225.7
(31.5) 453.2 589.6 (23.1) ----- ----- ----- ----- Operating Income
(Loss) 23.7 (21.6) 29.7 (19.4) ---- ----- ---- ----- Interest
income 0.5 1.1 1.5 3.8 Interest expense (5.1) (5.5) (16.2) (16.9)
Interest capitalized - 1.0 0.3 2.3 Other - net - (0.1) (0.2) 0.1
--- ---- ---- --- (4.6) (3.5) (14.6) (10.7) ---- ---- ----- -----
Income (Loss) Before Income Tax $19.1 $(25.1) $15.1 $(30.1) =====
====== ===== ====== Combined Operating Statistics: (a) Revenue
passengers (000) 1,815 1,989 (8.7) 5,055 5,754 (12.1) RPMs
(000,000) "traffic" 666 721 (7.6) 1,799 2,074 (13.3) ASMs (000,000)
"capacity" 855 945 (9.5) 2,470 2,831 (12.8) Passenger load factor
77.9% 76.3% 1.6pts 72.8% 73.3% (0.5)pts Yield per passenger mile
(in cents) 26.32 27.93 (5.8) 26.40 27.09 (2.5) Operating revenue
per ASM (in cents) 20.84 21.60 (3.5) 19.55 20.14 (2.9) Passenger
revenue per ASM (in cents) 20.50 21.31 (3.8) 19.23 19.85 (3.1)
Operating expenses per ASM (in cents) 18.07 23.88 (24.3) 18.35
20.83 (11.9) Operating expense per ASM excluding fuel and CRJ-700
fleet transition costs (b) (in cents) 14.22 13.60 4.6 15.12 14.38
5.1 GAAP fuel cost per gallon $2.11 $5.61 (62.4) $1.76 $3.37 (47.8)
Economic fuel cost per gallon (c) $2.19 $3.45 (36.5) $1.98 $3.18
(37.7) Fuel gallons (000,000) 15.6 17.2 (9.3) 45.1 52.1 (13.4)
Average number of full-time equivalent employees 3,269 3,687 (11.3)
3,320 3,777 (12.1) Aircraft utilization (blk hrs/day) 8.4 8.5 (1.2)
8.3 8.4 (1.2) Average aircraft stage length (miles) 334 325 2.8 326
324 0.6 Operating fleet at period-end 55 63 (8 a/c) 55 63 (8 a/c)
NM = Not Meaningful (a) Represents combined information for all
Horizon flights, including those operated under a Capacity Purchase
Agreement (CPA) with Alaska. See page 10 for additional line of
business information. (b) See page 10 for a reconciliation of these
non-GAAP measures and a discussion about why these measures may be
important to investors. (c) See page 11 for a reconciliation of
economic fuel cost. 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
this measure of unit costs excluding fuel, purchased capacity
costs, and other noted items may be important to investors for the
following reasons: - By eliminating fuel expense and certain
special items from our unit cost metrics, we believe that we have
better visibility into the results of 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. - Cost per ASM excluding fuel and certain special
items is one of the most important measures used by managements of
both Alaska and Horizon and by the Air Group Board of Directors in
assessing quarterly and annual cost performance. - Cost per ASM
excluding fuel (and other items as specified in our plan documents)
is an important metric for the employee incentive plan that covers
company management and certain other employee groups. - Cost per
ASM 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 new pilot contract transition costs and
fleet transition 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 "mainline" passenger unit revenues for Alaska, we
do not (nor are we able to) evaluate mainline unit revenues
excluding the impact that changes in fuel costs have had on ticket
prices. Fuel expense represents a large percentage of our total
mainline 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. The following
tables reconcile our non-GAAP financial measures to the most
directly comparable GAAP financial measures for both Alaska
Airlines, Inc. and Horizon Air Industries, Inc.: Alaska Airlines,
Inc. --------------------- (in millions, except for per ASM unit
information) Three Months Ended Nine Months Ended September 30,
September 30, ------------- ----------------- Mainline unit cost
reconciliations: 2009 2008 2009 2008 ------------------ ---- ----
---- ---- Mainline operating expenses $647.4 $954.5 $1,868.4
$2,292.9 Mainline ASMs 6,097 6,306 17,469 18,628 ----- ----- ------
------ Mainline operating expenses per ASM (in cents) 10.62 15.14
10.70 12.31 ===== ===== ===== ===== Mainline operating expenses
$647.4 $954.5 $1,868.4 $2,292.9 Less: aircraft fuel (166.6) (479.1)
(405.9) (864.0) Less: new pilot contract transition costs - -
(35.8) - Less: restructuring charges - (3.7) - (3.7) Less: fleet
transition costs - MD-80 - (21.5) - (47.5) --- ----- --- -----
Mainline operating expenses excluding fuel, restructuring charges
and fleet transition costs $480.8 $450.2 $1,426.7 $1,377.7 Mainline
ASMs 6,097 6,306 17,469 18,628 ----- ----- ------ ------ Mainline
operating expenses per ASM excluding fuel, restructuring charges
and fleet transition costs (in cents) 7.89 7.14 8.17 7.40 ==== ====
==== ==== Three Months Ended Nine Months Ended September 30,
September 30, ------------- ----------------- Reconciliation to
GAAP income (loss) before taxes: 2009 2008 2009 2008
------------------- ---- ---- ---- ---- Income before taxes,
excluding items noted below $118.7 $56.6 $137.0 $1.4 Change in
Mileage Plan terms - 42.3 - 42.3 New pilot contract transition
costs - - (35.8) - Restructuring charges - (3.7) - (3.7) Fleet
transition costs - MD-80 - (21.5) - (47.5) Adjustments to reflect
timing of gain or loss recognition resulting from mark-to-market
accounting on fuel hedges 6.1 (181.1) 47.4 (52.4) --- ------ ----
----- GAAP income (loss) before taxes as reported $124.8 $(107.4)
$148.6 $(59.9) ====== ======= ====== ====== Horizon Air Industries,
Inc. ------------------------------ (in millions, except for per
ASM unit information) Three Months Nine Months Ended Ended
September 30, September 30, ------------- ------------- Unit cost
reconciliations: 2009 2008 2009 2008 ----------------- ---- ----
---- ---- Operating expenses $154.5 $225.7 $453.2 $589.6 ASMs 855
945 2,470 2,831 --- --- ----- ----- Operating expenses per ASM (in
cents) 18.07 23.88 18.35 20.83 ===== ===== ===== ===== Operating
expenses $154.5 $225.7 $453.2 $589.6 Less: aircraft fuel (32.9)
(96.5) (79.7) (175.6) Less: fleet transition costs - CRJ-700 -
(0.7) - (6.8) --- ---- --- ---- Operating expenses excluding fuel
and CRJ-700 fleet transition costs $121.6 $128.5 $373.5 $407.2 ASMs
855 945 2,470 2,831 --- --- ----- ----- Operating expenses per ASM
excluding fuel and CRJ-700 fleet transition costs (in cents) 14.22
13.60 15.12 14.38 ===== ===== ===== ===== Unit cost
reconciliations- excluding all fleet transition costs:
-------------------- Operating expenses $154.5 $225.7 $453.2 $589.6
Less: aircraft fuel (32.9) (96.5) (79.7) (175.6) Less: fleet
transition costs - CRJ-700 - (0.7) - (6.8) Less: fleet transition
costs - Q200 1.2 (0.7) (8.8) (9.7) --- ---- ---- ---- Operating
expenses excluding fuel and all fleet transition costs $122.8
$127.8 $364.7 $397.5 ASMs 855 945 2,470 2,831 --- --- ----- -----
Operating expenses per ASM excluding fuel and all fleet transition
costs (in cents) 14.36 13.52 14.77 14.04 ===== ===== ===== =====
Reconciliation to GAAP income (loss) before taxes:
---------------------- Income (loss) before taxes, excluding mark-
to-market fuel hedging gains (losses) and CRJ-700 fleet transition
costs $17.9 $12.7 $5.4 $(13.6) Fleet transition costs - CRJ-700 -
(0.7) - (6.8) Adjustments to reflect timing of gain or loss
recognition resulting from mark-to-market accounting on fuel hedges
1.2 (37.1) 9.7 (9.7) --- ----- --- ---- GAAP income (loss) before
taxes as reported $19.1 $(25.1) $15.1 $(30.1) ===== ====== =====
====== Line of Business Information: -----------------------------
Horizon brand flying includes those routes in the Horizon system
not covered by the Alaska Capacity Purchase Agreement (CPA).
Horizon bears the revenue risk in those markets and, as a result,
traffic, yield and load factor impact revenue recorded by Horizon.
In the CPA arrangement, Horizon is insulated from market revenue
factors and is guaranteed contractual revenue amounts based on
operational capacity. As a result, yield and load factor
information is not presented. Three Months Ended September 30, 2009
------------------------------------- Capacity and Mix Load Factor
---------------- --------------- 2009 2008 Current Point Actual
Actual Change % Change (000,000) (000,000) Y-O-Y Total Actual Y-O-Y
--------- --------- ------- -------- ------ ------- Brand Flying
487 568 (14.3%) 57% 77.9% 2.9 Alaska CPA 368 377 (2.4%) 43% NM NM
--- --- ---- -- ------ ------ System Total 855 945 (9.5%) 100%
77.9% 1.6 === === ==== === ==== === Yield RASM ------ ---- Change
Change Actual Y-O-Y Actual Y-O-Y ------ ------ ------ ------ Brand
Flying (in cents) 27.81 (1.5%) 22.26 2.9% Alaska CPA (in cents) NM
NM 18.97 (11.8%) ------ --- ----- ----- System Total (in cents)
26.32 (5.8%) 20.84 (3.5%) ===== ==== ===== ==== NM= Not Meaningful
Nine Months Ended September 30, 2009
------------------------------------ Capacity and Mix Load Factor
---------------- --------------- 2009 2008 Current Point Actual
Actual Change % Change (000,000) (000,000) Y-O-Y Total Actual Y-O-Y
--------- --------- ------- -------- ------ ------- Brand Flying
1,463 1,736 (15.7%) 59% 72.1% 1.0 Alaska CPA 1,007 1,095 (8.0%) 41%
NM NM ----- ----- ---- -- ------ ------ System Total 2,470 2,831
(12.8%) 100% 72.8% (0.5) ===== ===== ===== === ==== ==== Yield RASM
------ ---- Change Change Actual Y-O-Y Actual Y-O-Y ------ ------
------ ------ Brand Flying (in cents) 26.90 0.4% 19.94 2.1% Alaska
CPA (in cents) NM NM 18.98 (10.1%) ------ -- ----- ----- System
Total (in cents) 26.40 (2.5%) 19.55 (2.9%) ===== ==== ===== ====
NM= Not Meaningful Alaska Airlines Fuel Reconciliation
----------------------------------- (in millions, except for per
gallon amounts) Three Months Ended September 30,
-------------------------------- 2009 2008 ---- ---- Dollars
Cost/Gal Dollars Cost/Gal ------- -------- ------- -------- Raw or
"into-plane" fuel cost $159.5 $1.99 $334.5 $3.89 Minus gains, or
plus the losses, during the period on settled hedges 13.2 0.16
(36.5) (0.42) ---- ---- ----- ----- Economic fuel expense $172.7
$2.15 $298.0 $3.47 ------ ----- ------ ----- Adjustments to reflect
timing of (gain) or loss recognition resulting from mark-to-market
accounting (6.1) (0.08) 181.1 2.10 ---- ----- ----- ---- GAAP fuel
expense $166.6 $2.07 $479.1 $5.57 ====== ===== ====== ===== Fuel
gallons 80.1 86.0 ==== ==== Nine Months Ended September 30,
------------------------------- 2009 2008 ---- ---- Dollars
Cost/Gal Dollars Cost/Gal ------- -------- ------- -------- Raw or
"into-plane" fuel cost $410.6 $1.79 $918.8 $3.56 Minus gains, or
plus the losses, during the period on settled hedges 42.7 0.19
(107.2) (0.42) ---- ---- ------ ----- Economic fuel expense $453.3
$1.98 $811.6 $3.14 ------ ----- ------ ----- Adjustments to reflect
timing of (gain) or loss recognition resulting from mark-to-market
accounting (47.4) (0.21) 52.4 0.20 ----- ----- ---- ---- GAAP fuel
expense $405.9 $1.77 $864.0 $3.34 ====== ===== ====== ===== Fuel
gallons 229.9 258.3 ===== ===== Horizon Air Fuel Reconciliation
------------------------------- (in millions, except for per gallon
amounts) Three Months Ended September 30,
-------------------------------- 2009 2008 ---- ---- Dollars
Cost/Gal Dollars Cost/Gal ------- -------- ------- -------- Raw or
"into-plane" fuel cost $31.4 $2.01 $66.9 $3.89 Minus gains, or plus
the losses, during the period on settled hedges 2.7 0.18 (7.5)
(0.44) --- ---- ---- ----- Economic fuel expense $34.1 $2.19 $59.4
$3.45 ----- ----- ----- ----- Adjustments to reflect timing of
(gain) or loss recognition resulting from mark-to-market accounting
(1.2) (0.08) 37.1 2.16 ---- ----- ---- ---- GAAP fuel expense $32.9
$2.11 $96.5 $5.61 ===== ===== ===== ===== Fuel gallons 15.6 17.2
==== ==== Nine Months Ended September 30,
------------------------------- 2009 2008 ---- ---- Dollars
Cost/Gal Dollars Cost/Gal ------- -------- ------- -------- Raw or
"into-plane" fuel cost $80.7 $1.79 $187.9 $3.61 Minus gains, or
plus the losses, during the period on settled hedges 8.7 0.19
(22.0) (0.43) --- ---- ----- ----- Economic fuel expense $89.4
$1.98 $165.9 $3.18 ----- ----- ------ ----- Adjustments to reflect
timing of (gain) or loss recognition resulting from mark-to-market
accounting (9.7) (0.22) 9.7 0.19 ---- ----- --- ---- GAAP fuel
expense $79.7 $1.76 $175.6 $3.37 ===== ===== ====== ===== Fuel
gallons 45.1 52.1 ==== ==== DATASOURCE: Alaska Airlines CONTACT:
Media, Caroline Boren of Alaska Airlines, +1-206-392-5101; or Dan
Russo of Horizon Air, +1-206-392-0218; or Investors, Shannon
Alberts of Alaska Air Group, +1-206-392-5218 Web Site:
http://www.alaskaair.com/
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