Friday, July 24, 2015

Alaska Air Group reports record profits

2Q15 profits are company's highest ever


Alaska Air Group, parent of Alaska Airlines and Horizon Air, reported record financial performance during the second quarter of 2015.

The Seattle-based company reported second quarter net income, excluding special items, of $230m, which represents a 46 percent increase over 2Q14. Earned net income under Generally Accepted Accounting Principles (GAAP) was $234m compared to net income of $165m in 2Q14.

Alaska Airlines Salmon One departs Seattle
The results mark the company’s 25th consecutive quarterly profit and the highest quarterly profit in the company’s history, Alaska Air Group (NYSE:ALK) CEO Brad Tilden said during the quarterly earnings call July 23.

“As we pause to take a look at how we’re doing mid-year and two-and-a-half years into the biggest competitive incursion we’ve seen in a while, I’m happy to share that we are thriving,” Tilden added, referring to Delta Air Lines’ (NYSE:DAL) aggressive expansion in the Seattle market.

The company reported combined operating revenue of more than $1.4bn including $1.2bn in passenger revenue, $30m income from freight and mail and $176m in "other - net" revenues.

Requests for additional details regarding the amount of ancillary revenue included in those revenue figures were not answered by time of publication. However, in its 2014 annual report, the airline noted that "Other - net revenues are primarily related to the Mileage Plan [but also include] certain ancillary or non-ticket revenues, such as checked-bag fees, reservations fees, ticket change fees, on-board food and beverage sales, and to a much lesser extent commissions from car and hotel vendors, and from the sales of travel insurance" as well as membership fees for its airport lounge, Alaska Airlines Boardroom.

The company took in approximately $921m in ancillary revenue during 2014 according to a report by IdeaWorksCompany.

Despite what he called “increased headwinds,” mainline carrier Alaska Airlines continued to add flights to new and existing destinations and crossed the 1,000-flight-per-day threshold on July 2, Tilden said, with more new flights to be added during the fall of 2015.

Tilden was generous in giving the company’s nearly 14,000 employees much of the credit for the airlines’ financial performance, citing the system operations team for making adjustments to keep aircraft moving on time despite runway closures at Seattle-Tacoma International Airport (SEA), Los Angeles International Airport (LAX) and Juneau (Alaska) International Airport (JNU).

He also noted that the company’s internal customer satisfaction score tied the score from 1Q15, which was the highest score the company has seen since it began tracking that data in 2007. Finally, Tilden noted that Alaska Airlines received its eighth consecutive J.D. Power award for customer service.

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Photo by Carl Dombek
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