Alaska Air Group Reports First Quarter 2008 Results
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Alaska Air Group, Inc. today reported a first quarter net loss of $35.9 million, or $0.97 per share, compared to a net loss of $10.3 million, or $0.26 per share, in the first quarter of 2007. Both...
Alaska Air Group, Inc.
"Although Alaska Air Group is in a good position relative to the rest of the industry, high fuel prices are eroding our profits and revenues are not increasing fast enough to offset them," said Bill Ayer, chairman and chief executive officer. "In response to the current industry environment, we’re taking a range of actions at Alaska Airlines and Horizon Air to increase revenues and lower costs, including transitioning Horizon to a single-type fleet of fuel-efficient Q400 aircraft."
Alaska Airlines’ mainline passenger traffic in the first quarter increased 11.3 percent on a capacity increase of 6.8 percent. Load factor increased by 3.0 percentage points to 74.4 percent. Alaska’s mainline operating revenue per available seat mile (ASM) increased 3.0 percent and its operating costs per ASM excluding fuel decreased 3.4 percent from the first quarter of 2007. Alaska’s total pretax loss for the quarter was $37.9 million, compared to a pretax loss of $7.5 million in 2007. Excluding mark-to-market fuel hedging adjustments, Alaska would have reported a pretax loss of $37.7 million for the quarter, compared to a $14.3 million pretax loss in the first quarter of 2007.
Horizon Air’s passenger traffic in the first quarter increased 4.9 percent on a 1.8 percent capacity increase. Load factor increased by 2.1 percentage points to 69.9 percent. Horizon’s operating revenue per ASM increased 7.7 percent and its operating costs per ASM excluding fuel decreased 1.7 percent. Horizon’s total pretax loss for the quarter was $17.2 million, compared to a pretax loss of $9.2 million in 2007. Excluding mark-to-market fuel-hedge accounting adjustments, Horizon’s pretax loss was $18.1 million for the quarter, compared to a pretax loss of $11.2 million in the first quarter of 2007.
Alaska Air Group had cash and short-term investments of $922 million at March 31, 2008, and has more than $1 billion today. Alaska Air Group has the second-best fuel hedge position in the industry, with half of Alaska and Horizon’s planned consumption for the remainder of 2008 indexed to a crude oil price of $76 per barrel.
Alaska Air Group’s debt-to-total capitalization ratio at March 31, 2008, was 73 percent. The company finished the quarter with 36.4 million shares outstanding.
Company acting in response to fuel costs, economy
Alaska Air Group also announced steps to further increase revenues and reduce expenses in response to record high fuel costs and a slowing economy. When fully implemented, these measures are expected to improve the company’s full-year pretax income by about $150 million.
"Our economic fuel costs for the first quarter of 2008 jumped $89 million or 45 percent over what we paid a year ago on a slight increase in consumption," Ayer said. "Given the magnitude of this increase and the softening economy, we’re taking aggressive actions now to improve our business and profitability."
Central to these actions is Horizon Air’s plan to transition from a fleet of 65 aircraft and three aircraft types to a single fleet of 76-seat Bombardier Q400s. To do so, the airline will transition out of its fleet of 20 Bombardier CRJ-700 regional jets within two years. This fleet change is in addition to a previously announced phase-out of its 12 remaining 37-seat Bombardier Q200s by June 2009.
"Through its combination of passenger comfort, speed and efficiency, the Q400 is the best aircraft for the majority of our markets," said Jeff Pinneo, president and chief executive officer of Horizon Air. "Simplifying to a single fleet of Q400s will result in increased fuel efficiency, plus substantially reduced costs for aircraft maintenance, spare parts, and pilot and mechanic training."
The Q400 is one of the most technologically advanced turboprop aircraft in the world. In addition to its jet-like speed and cabin environment, the Q400 burns 30 percent less fuel and produces 30 percent less emissions than a 70- seat jet.
When the transition out of Q200s and CRJ-700s is complete, Horizon’s fleet will consist of 48 Q400s or more, depending on how many of its 20 purchase options with Bombardier the airline chooses to exercise.
Flight frequency reductions will be necessary in certain markets as Horizon transitions from the Q200 to the higher-capacity Q400.
Some workforce reductions, which the airline hopes to accomplish primarily through attrition during the transition period, also will be necessary as Horizon moves to a smaller fleet.
Fee changes
Alaska Airlines and Horizon Air plan to raise certain fees to better align them with the current costs of providing added services. These include increasing the charge for booking through reservations and airport sales agents from $10 to $15, raising the fee for overweight baggage from $25 to $50, increasing the charge for transporting pets in the cabin from $75 to $100 one-way, and raising the unaccompanied minor fee from $30 to $75 for one-way nonstop flights and from $60 to $75 for connecting flights. The increases are effective May 21, 2008.
By summer, the airlines also will begin charging $25 for a second checked bag. First class and top-tier Mileage Plan members and customers on flights within the state of Alaska will be exempt from the new fee.
"Rising fuel and service costs without equivalent fare increases have forced us to make these changes," said Gregg Saretsky, Alaska’s executive vice president of flight and marketing. "We will continue to maintain a simple, customer-friendly fare structure and fees in accord with the costs of delivering these services in this environment of extremely high fuel prices."
Capacity changes
Alaska and Horizon are evaluating all routes to remove frequency in underperforming markets and redeploy it in more profitable ones. The airlines anticipate redeploying 3 percent to 5 percent of existing network capacity to generate new revenue in the fall schedule.
The airlines have already made substantial changes to their spring and summer schedules that include leaving the Orange County-Oakland and San Diego-San Francisco markets and reducing Long Beach-Seattle, Los Angeles-Eugene, Los Angeles-Mexico City, San Diego-Boise and San Diego- Spokane service. Aircraft serving these routes have been redeployed on transcontinental flights from Portland, Ore.; new Hawaii flights, including Maui service starting in July; the airlines’ new Seattle-California "West Most" schedule featuring 78 flights, with weekday hourly service to LAX and weekday flights nearly every two hours to five other airports; and new Horizon service between Los Angeles and Flagstaff, Ariz.
Fuel conservation
Alaska and Horizon announced further initiatives to reduce fuel consumption that will save the airlines roughly 1 million gallons a month. These include implementing a new flight planning system to select more direct routings, establishing single-engine taxi procedures for Alaska and using more ground power instead of burning fuel with the aircraft’s onboard auxiliary power unit. These steps are in addition to ongoing measures that include transitioning to more fuel-efficient aircraft, installing winglets on Alaska’s Next Generation 737s, eliminating unnecessary weight onboard, and working with the Federal Aviation Administration to pursue more direct routings and fuel-saving approaches and departures using existing flight deck technology.
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 9 to 13. Additionally, Alaska Air Group filed an investor update and information regarding the decision to transition out of Horizon’s CRJ-700 fleet on Form 8-K today. Please refer to that 8-K for unit cost and capacity guidance for the second quarter and full year of 2008.
A conference call regarding the first quarter 2008 results will be simulcast via the Internet at 8:30 a.m. Pacific time on April 24, 2008. It can be accessed through the company’s Web site at alaskaair.com. For those unable to listen to the live broadcast, a replay will be available after the conclusion of the call at alaskaair.com.
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, 2007. Some of these risks include increased competition, significant fuel costs, general economic conditions, labor costs and relations, our significant indebtedness, inability to meet cost reduction goals, terrorist attacks, seasonal fluctuations in our financial results, an aircraft accident, 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. These risk factors may not be exhaustive. 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 sister carrier, Horizon Air, together serve 92 cities through an expansive network throughout Alaska, the Lower 48, Hawaii, Canada and Mexico. For reservations visit alaskaair.com. For more news and information, visit the Alaska Airlines/Horizon Air newsroom at http://newsroom.alaskaair.com/.
ALASKA AIR GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in millions, except per share amounts)
Three Months
Ended March 31,
2008 2007
Operating Revenues:
Passenger $775.7 $695.8
Freight and mail 22.2 21.2
Other - net 41.6 42.4
Total Operating Revenues 839.5 759.4
Operating Expenses:
Wages and benefits 242.4 237.0
Variable incentive pay 3.6 10.5
Aircraft fuel, including hedging
gains and losses 282.0 184.9
Aircraft maintenance 58.0 58.5
Aircraft rent 43.6 43.3
Landing fees and other rentals 56.0 54.7
Contracted services 44.5 38.6
Selling expenses 34.5 39.0
Depreciation and amortization 49.3 41.9
Food and beverage service 12.3 11.2
Other 57.2 54.9
Fleet transition costs - Horizon 5.8 3.0
Total Operating Expenses 889.2 777.5
Operating Loss (49.7) (18.1)
Nonoperating Income (Expense):
Interest income 10.3 14.4
Interest expense (23.4) (21.0)
Interest capitalized 6.5 7.1
Other - net 0.2 (0.2)
(6.4) 0.3
Loss before income tax (56.1) (17.8)
Income tax benefit (20.2) (7.5)
Net Loss $(35.9) $(10.3)
Basic and Diluted Loss Per Share: ($0.97) ($0.26)
Shares Used for Computation:
Basic and Diluted 37.024 40.365
Alaska Air Group, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
March 31, December 31,
(in millions) 2008 2007
Cash and marketable securities $922 $823
Total current assets 1,542 1,391
Property and equipment-net 3,056 2,962
Other assets 179 138
Total assets $4,777 $4,491
Current liabilities $1,482 $1,374
Long-term debt 1,380 1,125
Other liabilities and credits 958 968
Shareholders' equity 957 1,024
Total liabilities and shareholders'
equity $4,777 $4,491
Debt to Capitalization, adjusted for
operating leases 73%:27% 70%:30%
Number of common shares outstanding 36.400 38.051
Air Group Net Loss and EPS Reconciliation:
The following table summarizes Alaska Air Group, Inc.'s net loss and
amounts per share during 2008 and 2007 excluding adjustments to reflect
the timing of gain or loss recognition resulting from mark-to-market
fuel-hedge accounting as reported in accordance with GAAP (in millions
except per share amounts):
Three Months Ended March 31,
2008 2007
Diluted Diluted
Dollars EPS Dollars EPS
Net loss and diluted EPS, excluding
mark-to-market hedging adjustments $(36.3) $(0.98) $(15.8) $(0.39)
Adjustments to reflect the timing of
gain recognition resulting from
mark- to-market fuel-hedge
accounting, net of tax 0.4 0.01 5.5 0.13
Reported GAAP amounts $(35.9) $(0.97) $(10.3) $(0.26)
Alaska Airlines Financial and Statistical Data
Three Months Ended March 31,
Financial Data (in millions): 2008 2007 % Change
Operating Revenues:
Passenger $607.3 $545.9 11.2
Freight and mail 21.3 20.7 2.9
Other - net 34.4 35.9 (4.2)
Total mainline operating revenues 663.0 602.5 10.0
Passenger - purchased capacity 70.4 57.3 22.9
Total Operating Revenues 733.4 659.8 11.2
Operating Expenses:
Wages and benefits 190.2 187.3 1.5
Variable incentive pay 2.6 7.7 (66.2)
Aircraft fuel, including hedging
gains and losses 233.7 157.6 48.3
Aircraft maintenance 42.1 34.3 22.7
Aircraft rent 28.2 26.3 7.2
Landing fees and other rentals 41.9 41.8 0.2
Contracted services 34.7 29.4 18.0
Selling expenses 26.5 31.6 (16.1)
Depreciation and amortization 38.8 35.4 9.6
Food and beverage service 11.7 10.6 10.4
Other 41.8 39.8 5.0
Total mainline operating expenses 692.2 601.8 15.0
Purchased capacity costs 76.7 67.4 13.8
Total Operating Expenses 768.9 669.2 14.9
Operating Loss (35.5) (9.4)
Interest income 13.1 15.9
Interest expense (21.8) (20.4)
Interest capitalized 5.9 6.3
Other - net 0.4 0.1
(2.4) 1.9
Loss Before Income Tax $(37.9) $(7.5)
Mainline Operating Statistics:
Revenue passengers (000) 4,080 3,862 5.6
RPMs (000,000) "traffic" 4,526 4,066 11.3
ASMs (000,000) "capacity" 6,084 5,694 6.8
Passenger load factor 74.4% 71.4% 3.0pts
Yield per passenger mile (in cents) 13.42 13.43 (0.1)
Operating revenue per ASM (in cents) 10.90 10.58 3.0
Passenger revenue per ASM (in cents) 9.98 9.59 4.1
Operating expense per ASM (in cents) 11.38 10.57 7.6
Aircraft fuel per ASM (in cents) 3.84 2.77 38.6
Operating expense per ASM excluding
fuel (a) (in cents) 7.54 7.80 (3.4)
GAAP fuel cost per gallon $2.72 $1.87 45.4
Economic fuel cost per gallon (b) $2.72 $1.95 39.5
Fuel gallons (000,000) 85.9 84.2 2.0
Average number of full-time
equivalent employees 9,881 9,542 3.6
Aircraft utilization (blk hrs/day) 10.8 10.8 -
Average aircraft stage length (miles) 969 917 5.7
Operating fleet at period-end 115 114 1 a/c
Regional Operating Statistics:
RPMs (000,000) 267 220 21.4
ASMs (000,000) 363 316 14.9
Passenger load factor 73.6% 69.6% 4.0pts
Yield per passenger mile(in cents) 26.37 26.05 1.2
Operating revenue per ASM(in cents) 19.39 18.13 7.0
Operating expenses per ASM(in cents) 21.13 21.33 (0.9)
(a) See page 8 for a reconciliation of these non-GAAP measures and a
discussion about why these measures may be important to investors.
(b) See page 10 for a reconciliation of economic fuel cost.
Horizon Air Financial and Statistical Data
Three Months Ended March 31,
Financial Data (in millions): 2008 2007 % Change
Operating Revenues:
Passenger (a) $174.1 $159.4 9.2
Freight and mail 0.6 0.5 20.0
Other - net 2.5 1.7 47.1
Total Operating Revenues 177.2 161.6 9.7
Operating Expenses:
Wages and benefits 50.3 48.9 2.9
Variable incentive pay 1.0 2.8 (64.3)
Aircraft fuel, including hedging
gains and losses 48.3 27.3 76.9
Aircraft maintenance 15.9 24.2 (34.3)
Aircraft rent 15.4 17.0 (9.4)
Landing fees and other rentals 14.4 13.2 9.1
Contracted services 8.0 6.1 31.1
Selling expenses 8.0 7.4 8.1
Depreciation and amortization 10.2 6.2 64.5
Food and beverage service 0.6 0.6 -
Other 12.8 12.8 -
Fleet transition costs 5.8 3.0 NM
Total Operating Expenses 190.7 169.5 12.5
Operating Loss (13.5) (7.9)
Interest income 1.4 1.0
Interest expense (5.7) (3.0)
Interest capitalized 0.6 0.8
Other - net - (0.1)
(3.7) (1.3)
Loss Before Income Tax $(17.2) $(9.2)
Combined Operating Statistics: (a)
Revenue passengers (000) 1,852 1,609 15.1
RPMs (000,000) "traffic" 658 627 4.9
ASMs (000,000) "capacity" 942 925 1.8
Passenger load factor 69.9% 67.8% 2.1pts
Yield per passenger mile(in cents) 26.46 25.42 4.1
Operating revenue per ASM(in cents) 18.81 17.47 7.7
Operating expenses per ASM(in cents) 20.24 18.32 10.5
Aircraft fuel per ASM(in cents) 5.12 2.95 73.6
Operating expense per ASM excluding
fuel (b) (in cents) 15.12 15.37 (1.7)
Fleet transition costs per
ASM (b) (in cents) 0.62 0.32 NM
Operating expense per ASM excluding
fuel and fleet transition costs (b)
(in cents) 14.50 15.05 (3.6)
GAAP fuel cost per gallon $2.73 $1.87 46.0
Economic fuel cost per gallon (c) $2.78 $2.01 38.3
Fuel gallons (000,000) 17.7 14.6 21.2
Average number of full-time
equivalent employees 3,851 3,694 4.3
Aircraft utilization (blk hrs/day) 8.3 8.7 (4.6)
Operating fleet at period-end 66 71 (5 a/c)
NM = Not Meaningful
(a) Represents combined information for all Horizon flights, including
those operated under Capacity Purchase Agreements (CPAs) with Alaska
and as Frontier Jet Express (through November 2007). See page 10 for
additional line of business information.
(b) See pages 8 and 9 for a reconciliation of these non-GAAP measures and
a discussion about why these measures may be important to investors.
(c) See page 10 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:
-- Cost per available seat mile (ASM) excluding fuel, purchased capacity
costs, and other special items is one of the most important measures
used by managements of both Alaska and Horizon and the Air Group Board
of Directors in assessing quarterly and annual cost performance and,
for Alaska Airlines, the operating results of the "mainline"
operation, which includes the operation of the B737 and MD80 aircraft
fleets branded in Alaska Airlines livery.
-- Cost per ASM excluding fuel, purchased capacity costs, and other items
as specified in our governing documents is an important metric in the
employee incentive plan that covers company management and executives.
-- By eliminating fuel expense 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
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, and maintenance costs,
which are more controllable by management.
-- Cost per ASM excluding fuel and purchased capacity costs 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 holders of our
common stock.
-- By eliminating the impact of certain noted items, management is
provided the ability to measure and monitor performance both with and
without these special items. Management believes that the disclosure
of the impact of certain items such as the fleet transition costs is
important to the reader as it provides information on significant
items that are not indicative of future performance. Industry
analysts and investors consistently measure the Company's performance
without these items for better comparability between periods and
between other airlines.
-- Although we disclose our "mainline" unit revenues for Alaska to
eliminate those revenues associated with purchased capacity flying
performed by others on our behalf, we do not (nor are we able to)
present unit revenues excluding the impact that rising fuel costs have
had on ticket prices. This is a limitation of our non-GAAP measure
that excludes fuel from unit costs, as fuel represents approximately
30% of our total mainline operating expenses, and fluctuations in our
fuel prices are often the driver of changes in unit revenues in the
mid-to long term. We would caution the readers of these financial
statements not to place undue reliance on unit costs excluding fuel as
a measure or predictor of future profitability.
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 March 31,
Mainline unit cost reconciliations: 2008 2007
Mainline operating expenses $692.2 $601.8
Mainline ASMs 6,084 5,694
Mainline operating expenses per ASM(in cents) 11.38 10.57
Mainline operating expenses $692.2 $601.8
Less: aircraft fuel (233.7) (157.6)
Mainline operating expenses excluding
fuel $458.5 $444.2
Mainline ASMs 6,084 5,694
Mainline operating expenses per ASM
excluding fuel(in cents) 7.54 7.80
Three Months Ended March 31,
Reconciliation to GAAP loss before taxes : 2008 2007
Loss before taxes, excluding mark-to-
market hedging gains (losses) $(37.7) $(14.3)
Adjustments to reflect timing of gain or
loss recognition resulting from
mark-to-market accounting on fuel hedges (0.2) 6.8
GAAP loss before taxes as reported $(37.9) $(7.5)
Horizon Air Industries, Inc.
(in millions, except for per ASM unit information)
Three Months Ended March 31,
Unit cost reconciliations: 2008 2007
Operating expenses $190.7 $169.5
ASMs 942 925
Operating expenses per ASM(in cents) 20.24 18.32
Operating expenses $190.7 $169.5
Less: aircraft fuel (48.3) (27.3)
Operating expenses excluding fuel $142.4 $142.2
ASMs 942 925
Operating expenses per ASM
excluding fuel(in cents) 15.12 15.37
Unit cost reconciliations-excluding
fleet transition costs:
Operating expenses $190.7 $169.5
Less: aircraft fuel (48.3) (27.3)
Less: fleet transition costs (5.8) (3.0)
Operating expenses excluding fuel
and fleet transition costs $136.6 $139.2
ASMs 942 925
Operating expenses per ASM
excluding fuel and fleet
transition costs(in cents) 14.50 15.05
Reconciliation to GAAP loss
before taxes:
Loss before taxes, excluding mark-
to-market fuel hedging gains $(18.1) $(11.2)
Adjustments to reflect timing of
gain recognition resulting from
mark-to-market accounting on fuel
hedges 0.9 2.0
GAAP loss before taxes as reported $(17.2) $(9.2)
Line of Business Information:
Horizon brand flying includes those routes in the Horizon system not
covered by the Alaska and Frontier Capacity Purchase Agreements (CPA).
Horizon bears the revenue risk in those markets and, as a result, traffic,
yield and load factor impact revenue recorded by Horizon. In CPA
arrangements, Horizon is (or was, as was the case with the Frontier CPA
which ended in November 2007) 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 March 31, 2008
Capacity and Mix
Q1 2008 Q1 2007
Actual Actual Change Current % Point Change
(000,000) (000,000) Y-O-Y Total Y-O-Y
Brand Flying 598 464 29.0% 63% 13
Alaska CPA 344 297 15.8% 37% 5
Frontier CPA - 164 (100.0%) 0% (18)
System Total 942 925 1.8% 100% -
Load Factor Yield RASM
Point Change Actual Change Actual Change
Brand Flying Actual Y-O-Y (in cents) Y-O-Y (in cents) Y-O-Y
Alaska CPA 67.2% 0.1 25.56 (8.4%) 17.70 (7.9%)
Frontier CPA NM NM NM NM NM NM
System Total NM NM NM NM NM NM
69.9% 2.1 26.46 4.1% 18.81 7.7%
NM= Not Meaningful.
Alaska Airlines Fuel Reconciliation
(in millions, except for per gallon amounts)
Three Months Ended March 31,
2008 2007
Dollars Cost/Gal Dollars Cost/Gal
Raw or "into-plane" fuel cost $257.7 $3.00 $165.9 $1.97
Minus gains during the period on
settled hedges (24.2) (0.28) (1.5) (0.02)
Economic fuel expense $233.5 $2.72 $164.4 $1.95
Minus the gain, or plus the loss,
recognized during current period for
contracts settling in future periods (21.9) (0.25) (11.0) (0.13)
Plus cumulative gains recognized in
prior periods for contracts settled
in current period 22.1 0.25 4.2 0.05
Net adjustments 0.2 0.00 (6.8) (0.08)
GAAP fuel expense $233.7 $2.72 $157.6 $1.87
Fuel gallons 85.9 84.2
Horizon Air Fuel Reconciliation
(in millions, except for per gallon amounts)
Three Months Ended March 31,
2008 2007
Dollars Cost/Gal Dollars Cost/Gal
Raw or "into-plane" fuel cost $54.2 $3.06 $29.6 $2.03
Minus gains during the period on
settled hedges (5.0) (0.28) (0.3) (0.02)
Economic fuel expense $49.2 $2.78 $29.3 $2.01
Minus the gain, or plus the loss,
recognized during current period for
contracts settling in future periods (5.1) (0.29) (2.8) (0.19)
Plus cumulative gains recognized in
prior periods for contracts settled
in current period 4.2 0.24 0.8 0.05
Net adjustments (0.9) (0.05) (2.0) (0.14)
GAAP fuel expense $48.3 $2.73 $27.3 $1.87
Fuel gallons 17.7 14.6
First Call Analyst:
FCMN Contact: maria.koenig@alaskaair.com
SOURCE: Alaska Air Group, Inc.
CONTACT: Media, Caroline Boren of Alaska Airlines, +1-206-392-5101, or
Dan Russo of Horizon Air, +1-206-431-4513; or Investor|analyst, Shannon Albert
of Alaska Air Group, +1-206-392-5218
Web site: http://www.alaskaair.com/