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SeaTac’s Alaska Air Group may post industry’s healthiest profits

Post by John Gillie / The News Tribune on Jan. 18, 2011 at 1:32 pm |
January 18, 2011 2:36 pm

Airline financial analysts at AirlineFinancials.com expect SeaTac’s Alaska Air Group to show the greatest profit margin among major domestic carriers as those airlines announce their earnings for 2010.

The Website is predicting that the nation’s eight largest airlines will report nearly $4 billion in profits on $122.2 billion in revenues for last year.

Analysts there predict that Alaska Air Group, parent company of Alaska Airlines and Horizon Air, will report $251 million in profits for 2010 when it reports its earnings next Tuesday. That profit level would give Alaska a 6.6 percent profit. That’s 2.1 percentage points more than the next best major carrier, United, which is expected to post a 4.5 percent profit for the year.

Capacity discipline has kept airlines in the black this year. In previous recessions as business has improved airlines have added capacity faster than traffic increased causing profits to drop and sparking fare wars. This time, most major carriers have added to their schedules only modestly. The payoff has been profitability.

Alaska’s 10-year effort to improve its efficiency with new planes, better routing and careful use of staff has given it an advantage over other carriers. The airline holding company also has been adept at using fuel hedging to keep its fuel costs stable even when oil prices are rising.

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