EA CO AS From United States, joined Nov 2001, 9257 posts, RR: 68 Reply 2, posted (3 years 8 months 2 weeks 4 days 12 hours ago) and read 328 times:
Also keep in mind that AAG is in contract negotiations with all their major labor groups (asking for cuts in pay, benefits, etc.) so it's in their interest to manipulate when certain special charges are taken to make the 4Q04 and FY04 results look as bloody as possible - they're not interested in showing a small loss or even - GASP! - a profit when in concessionary negotiations.
Contact: Brad Tilden -or- Caroline Boren
206/392-5362 206/392-5799
FOR IMMEDIATE RELEASE Jan. 28, 2005
ALASKA AIR GROUP REPORTS FOURTH QUARTER RESULTS
SEATTLE — Alaska Air Group, Inc. (NYSE:ALK) today reported a fourth quarter net loss of $44.9 million, or $1.66 per diluted share, compared to a net loss of $16.1 million, or $0.60 per diluted share, in the fourth quarter of 2003. For the full year, the company reported a net loss of $15.3 million, or $0.57 per share, compared to net income of $13.5 million, or $0.51 per diluted share in 2003.
Fourth quarter results in 2004 include a restructuring charge of $25.9 million ($16.0 million, net of tax, or $0.59 per share) and additional impairment charges of $0.6 million ($0.4 million, net of tax, or $0.01 per share) related to Horizon’s retired F-28 fleet. This quarter’s results also include $23.1 million ($14.2 million, net of tax, or $0.53 per share) in mark-to-market hedging losses reflecting a decrease in the fair value of the company’s fuel hedge portfolio during the quarter. Without these items, the net loss would have been $14.3 million, or $0.53 per diluted share during the fourth quarter of 2004. Excluding the full-year impact of the items discussed above, as well as the B737-200 impairment charge and the navigation fee recovery recorded earlier in the year, and government compensation recorded in 2003, the 2004 full year net income would have been $5.2 million, or $0.19 per diluted share, compared to a net loss of $30.8 million, or $1.15 per diluted share, in 2003.
“The improvement in our operating results for the year shows that we are continuing to make headway with our restructuring. Our move in early 2004 to simplify fares, coupled with our employees’ ongoing focus on the customer experience, contributed to a jump in our passenger traffic and loads,” said Bill Ayer, Alaska Air Group’s chairman and chief executive officer. “However, we would have clearly been in the red in 2004, after adjusting for the unusual items, if not for fuel hedging gains.
“As we head into 2005, we must continue to pursue cost savings initiatives that will help us become consistently profitable, and weather the onslaught of low-cost competition, restructured network airlines and very high fuel prices,” Ayer said.
Alaska Airlines’ passenger traffic in the fourth quarter increased 10.2 percent on a capacity increase of 5.0 percent. Alaska’s load factor increased 3.4 percentage points to 72.9 percent compared to the same period in 2003. Alaska’s operating revenue per available seat mile (ASM) increased 0.4 percent, while its operating cost per ASM excluding fuel and restructuring charges decreased 8.6 percent. Alaska’s pretax loss for the quarter was $68.9 million, compared to a pretax loss of $27.3 million in 2003. Excluding the unusual items referenced above, Alaska’s pretax loss was $22.7 million for the quarter.
Horizon Air’s passenger traffic in the fourth quarter increased 36.8 percent on a 28.1 percent capacity increase. Horizon’s load factor increased by 4.4 percentage points to 71.7 percent compared to the same period in 2003. Horizon’s operating revenue per ASM decreased 17.2 percent, while its operating cost per ASM excluding fuel and the impairment charge decreased 18.1 percent. The decrease in Horizon’s revenue per ASM and cost per ASM excluding fuel is largely due to the addition of Horizon’s contract flying for Frontier Airlines. This flying represented 23.1 percent of Horizon’s capacity during the fourth quarter and 9.9 percent of its passenger revenues. Horizon’s pretax loss for the quarter was $1.6 million, compared to a pretax income of $5.4 million in 2003. Excluding the unusual items referenced above, Horizon’s pretax income was $1.8 million for the quarter.
Alaska Air Group had cash and short-term investments at Dec. 31, 2004, of approximately $874 million compared to $812 million at Dec. 31, 2003. The company’s debt-to-capital ratio, assuming aircraft operating leases are capitalized at seven times annualized rent, was 78 percent as of Dec. 31, 2004, compared to 77 percent as of Dec. 31, 2003.
A summary of 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 on pages 6 through 11.
A conference call regarding the fourth quarter 2004 results will be simulcast via the Internet at 8:30 a.m. Pacific Time. It may be accessed through the company’s website at [ http://www.alaskaair.com/ ]www.alaskaair.com. For those unable to listen to the live broadcast, a replay will be available after the conclusion of the call at [ http://www.alaskaair.com/ ]www.alaskaair.com.
[Edited 2005-01-28 19:01:51]
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan
Qxq400 From United States, joined Dec 2004, 255 posts, RR: 3 Reply 3, posted (3 years 8 months 2 weeks 4 days 12 hours ago) and read 306 times:
True, but I do believe that AAG should of and could have turned a profit if there focus would have been in the right place.
I still do not see why we are code sharing with NW when they only pay us $15 a segment! That is ridiculous given that 1/2 of our flights our code share.
Why do we keep overselling flights and then giving away free tickets to pax that are bumped?
I could go on and on but I would them be whining .
At least we are not giving back wages......YET.
Baw716 From United States, joined Nov 2003, 1761 posts, RR: 32 Reply 4, posted (3 years 8 months 2 weeks 4 days 12 hours ago) and read 290 times:
Qxg400
I need to review ASs financials a little more to opine on your first quesiton, however with regard to your second question the answer is really very simple.
1. Overbooking is required to compensate for no shows.
2. The policy of asking for and taking voluteers with the offer of a free ticket is a much less inexpensive policy than to simply bump a passenger off a flight and have to pay them plus transport them for free. With volunteers, AS can provide a soft dollar solution to the oversell. Since the seats are inventory controlled, space can only be booked if the flight had the available seats. If the flight is near capacity, you won't find the space. The cost of carrying the passenger is incrementally very small and with a budgeted amount of breakage (people actually not using the tickets), the financial liability is diminished even further. Better yet, it is a good customer relations option for the carrier. Better to give away a free ticket as a thank you to a volunteer for stepping off a flight than to pay a passenger, transport them for free and have them pissed off at you for kicking them off their flight.
From your post I gather than you are an AAG employee. I would suggest that you consider that Alaska is a great deal more healthy than other carriers in the USA and that is principally due to managements efforts to keep costs down and your efforts to take care of your customer, no matter what your job function. While I can appreciate your situation, it could be much worse. You could be working for USAirways or United.
baw716
David L. Lamb, fmr Area Mgr Alitalia SFO 1998-2002, fmr Regional Analyst SFO-UAL 1992-1998
Qxq400 From United States, joined Dec 2004, 255 posts, RR: 3 Reply 5, posted (3 years 8 months 2 weeks 4 days 11 hours ago) and read 265 times:
I agree that AAG is FAR more healther than most of the other airlines out there. I do believe we can do far better that is all.
As your point about oversales goes I do not buy it. Jet Blue does not oversell there flights, However if you are a no show you more than likely lose your money. The result is still full planes with out the annoyance of agents asking for vol's.
I know that were I am people will not vol unless offered 2 btt's. The reason is purely supply and demand. They know we over book,use small planes here and are very heavily dependent on business travelers who more often than not will not vol.
They know we will bend over backwards to please our freq. travelers. I have people in the summer take there whole family to MCO on btt's. How are we making a profit doing that??
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