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Alaska Air Group reports record third quarter earnings

Post by John Gillie / The News Tribune on Oct. 20, 2011 at 10:02 am |
October 20, 2011 10:05 am

Higher fuel costs put pressure on profits in the third quarter, but SeaTac’s Alaska Air Group today still reported record profits for the period.

The airline holding company, which owns Alaska Airlines and regional carrier Horizon Air, reported profits of $131.7 million or $3.58 a shre compared with $118.1 million, or $3.21 a share in last year’s third quarter. Those profits beat Wall Street’s estimate of $3.33 a share as reported by First Call.

Those figures excluded mark-to-market special charges of $84.3 million for the value of the airline’s fuel hedges at the end of the quarter. Including those charges, the airline holding company made $77.5 million in the quarter.

The company said its costs not including fuel declined by 2.6 percent and employee productivity improved by 3.8 percent in the third quarter.

Despite record load factors (the percentage of seats filled by paying passengers), Alaska achieved on-time performance of over 90 percent in the third quarter. Alaska has the top on-time record among the nation’s top 10 airlines over the last year.

The airline holding company has continued to add capacity as it cuts non-performing routes, adding more flights in some markets such as the mainland-to-Hawaii and opening up new transcontinental routes such as the recently announced Sea-Tac-Kansas City service.

That opportunistic readjustment of the airline’s schedules has resulted in the airline pulling 21 aircraft out of its core West Coast route structure over the last few years and redeploying them to other routes that are more profitable, company officials said.

Alaska Chairman Bill Ayer said the company will add about 5 percent to its capacity next year. The airline is acquiring several high capacity Boeing 737-900ERs to its fleet next year while retiring a smaller number of smaller capacity aircraft.

The company has a stash of $1.3 billion in cash and marketable securities. The company continues to buy back its shares from time to time. It has no current plans to issue shareholders a dividend.

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