Alaska Air Group Reports Third Quarter Results
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Alaska Air Group, Inc. today reported third quarter net income of $90.2 million, or $2.71 per diluted share, compared to $74 million, or $2.29 per diluted share, in the third quarter of 2004. Both...
Alaska Air Group, Inc.
Both the 2005 and 2004 results include certain significant items related to mark-to-market fuel hedge accounting adjustments, refunds of navigation fees and restructuring activities that impact the comparability of the quarters. Excluding the impact of these items, net income would have been $71.5 million, or $2.16 per diluted share for the third quarter of 2005, compared to net income of $50.7 million, or $1.58 per diluted share in the third quarter of 2004.
"These numbers show that the hard work of our employees is paying off," said Bill Ayer, chairman and chief executive officer. "Our continued progress on the earnings front, combined with an improving operation, give us confidence that we are on the right track."
Alaska Airlines’ passenger traffic in the third quarter increased 0.6 percent on a capacity decrease of 3.2 percent. Alaska’s load factor increased 3 percentage points to 79 percent compared to the same period in 2004. Alaska’s operating revenue per available seat mile (ASM) increased 12.4 percent, while its operating cost per ASM excluding fuel, navigation fee refund and restructuring charges increased 2.4 percent. Alaska’s pretax income for the quarter was $133 million, compared to $97.9 million in the same period of 2004. Excluding the notable items referenced above, Alaska’s pretax income was $106 million for the quarter, compared to $64.1 million in the third quarter of 2004.
Horizon Air’s passenger traffic in the third quarter increased 13.6 percent on a 9.8 percent capacity increase. Horizon’s load factor increased by 2.6 percentage points to 75 percent compared to the same period in 2004. Horizon’s operating revenue per ASM increased 0.5 percent and its operating cost per ASM excluding fuel increased 1.3 percent. Horizon’s pretax income for the quarter was $17.3 million, compared to $24.4 million in the third quarter of 2004. Excluding the notable items referenced above, Horizon’s pretax income was $14.4 million for the quarter, compared to $17.5 million in the same period in 2004.
Alaska Air Group had cash and short-term investments at Sept. 30, 2005, of approximately $746 million, compared to $874 million at Dec. 31, 2004.
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 following.
A conference call regarding the third quarter 2005 results will be simulcast via the Internet at 9:30 a.m. Pacific time on Oct. 20, 2005. It may 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.
This report may contain forward-looking statements that are intended to be subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to future events or our future financial performance and involve known and unknown risks and uncertainties that may cause our actual results or performance to be materially different from those indicated by any forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "forecast," "may," "will," "could," "should," "expect," "plan," "believe," "potential" or other similar words indicating future events or contingencies. Some of the things that could cause our actual results to differ from our expectations are: changes in our operating costs including fuel, which can be volatile; the competitive environment and other trends in our industry; our ability to meet our cost reduction goals; labor disputes; economic conditions; our reliance on automated systems; increases in government fees and taxes; actual or threatened terrorist attacks; global instability and potential U.S. military actions or activities; insurance costs; changes in laws and regulations; liability and other claims asserted against us; operational disruptions; compliance with financial covenants; our ability to attract and retain qualified personnel; third-party vendors and partners; our significant indebtedness; downgrades of our credit ratings and the availability of financing. For a discussion of these and other risk factors, see Item 7 of the Company’s Annual Report for the year ended Dec. 31, 2004, on Form 10-K. 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 disclaim any obligation to publicly update or revise any forward-looking statements after the date of this report to conform them to actual results.
ALASKA AIR GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(In Millions Except Per Share Amounts)
Three Months Nine Months
Ended September 30 Ended September 30
2005 2004 2005 2004
Operating Revenues:
Passenger $777.4 $706.0 $2,061.9 $1,896.7
Freight and mail 26.1 25.5 71.3 68.3
Other - net 42.2 36.7 111.5 102.5
Total Operating Revenues 845.7 768.2 2,244.7 2,067.5
Operating Expenses:
Wages and benefits 221.5 248.9 693.5 737.1
Contracted services 30.8 19.7 96.2 79.1
Aircraft fuel 204.1 148.4 526.0 384.8
Aircraft maintenance 55.2 37.0 174.6 137.9
Aircraft rent 46.9 46.7 140.0 141.5
Food and beverage service 13.5 14.3 37.1 39.5
Other selling
expenses and commissions 44.3 37.5 119.5 111.5
Depreciation and amortization 36.3 35.7 105.8 105.8
Landing fees and other rentals 52.4 49.3 156.5 138.5
Other 51.9 46.4 156.4 147.0
Restructuring charges (1.4) 27.5 20.7 27.5
Impairment of aircraft
and related spare parts -- -- -- 39.6
Total Operating Expenses 755.5 711.4 2,226.3 2,089.8
Operating Income (Loss) 90.2 56.8 18.4 (22.3)
Nonoperating Income (Expense):
Interest income 8.6 7.9 21.6 18.6
Interest expense (16.1) (13.6) (45.5) (38.9)
Interest capitalized 2.8 0.5 4.9 1.1
Fuel hedging gains 62.9 66.9 198.6 93.3
Other - net (1.6) 0.7 (4.5) 0.5
56.6 62.4 175.1 74.6
Income before income tax
and accounting change 146.8 119.2 193.5 52.3
Income tax expense 56.6 45.2 76.0 22.7
Income before accounting change $90.2 $74.0 $117.5 $29.6
Cumulative effect of
accounting change, net of tax -- -- (90.4) --
Net Income $90.2 $74.0 $27.1 $29.6
Basic Earnings Per Share:
Income before
accounting change $3.28 $2.75 $4.31 $1.10
Cumulative effect
of accounting change NA NA (3.32) NA
Net Income Per Share $3.28 $2.75 $0.99 $1.10
Diluted Earnings Per Share:
Income before
accounting change $2.71 $2.29 $3.62 $0.98
Cumulative effect
of accounting change NA NA (2.69) NA
Net Income Per Share $2.71 $2.29 $0.93 $0.98
Shares Used for Computation:
Basic 27.502 26.862 27.274 26.820
Diluted 33.857 32.631 33.523 32.691
Alaska Air Group, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
September 30, December 31,
(In Millions) 2005 2004
Cash and marketable securities $746 $874
Total current assets $1,308 $1,242
Property and equipment-net 1,959 1,908
Other assets 243 185
Total assets $3,510 $3,335
Current liabilities $1,102 $957
Long-term debt and capital lease obligations 970 990
Other liabilities and credits 738 723
Shareholders' equity 700 665
Total liabilities and shareholders' equity $3,510 $3,335
Alaska Airlines Financial and Statistical Data
Three Months Ended Nine Months Ended
September 30, September 30,
Financial Data % %
(in millions): 2005 2004 Change 2005 2004 Change
Operating Revenues:
Passenger $624.1 $576.6 8.2 $1,656.6 $1,545.8 7.2
Freight and mail 25.2 24.5 2.9 68.4 65.3 4.7
Other - net 40.0 31.7 26.2 103.9 90.6 14.7
Total Operating Revenues 689.3 632.8 8.9 1,828.9 1,701.7 7.5
Operating Expenses:
Wages and benefits 174.5 207.3 (15.8) 556.2 611.8 (9.1)
Contracted services 27.6 17.8 55.1 87.0 70.3 23.8
Aircraft fuel 176.6 130.2 35.6 455.7 336.4 35.5
Aircraft maintenance 43.2 27.1 59.4 143.5 111.3 28.9
Aircraft rent 29.5 28.1 5.0 87.2 85.5 2.0
Food and beverage service 12.8 13.7 (6.6) 35.2 37.9 (7.1)
Other selling
expenses and commissions 34.0 35.9 (5.3) 97.9 101.1 (3.2)
Depreciation
and amortization 31.9 32.0 (0.3) 92.9 95.2 (2.4)
Landing fees
and other rentals 40.4 37.6 7.4 121.5 106.1 14.5
Other 39.8 34.6 15.0 119.7 110.4 8.4
Restructuring charges (1.4) 27.5 NM 20.7 27.5 NM
Impairment of aircraft
and related spare parts -- -- NM -- 36.8 NM
Total Operating Expenses 608.9 591.8 2.9 1,817.5 1,730.3 5.0
Operating Income (Loss) 80.4 41.0 NM 11.4 (28.6) NM
Interest income 9.2 8.4 23.1 20.0
Interest expense (13.0) (11.6) (36.9) (33.1)
Interest capitalized 2.6 0.4 4.5 0.7
Fuel hedging gains 54.8 58.8 172.1 82.1
Other - net (1.0) 0.9 (3.7) 0.8
52.6 56.9 159.1 70.5
Income Before Income Tax
and Accounting Change $133.0 $97.9 NM $170.5 $41.9 NM
Operating Statistics:
Revenue passengers (000) 4,632 4,589 0.9 12,715 12,296 3.4
RPMs (000,000) 4,598 4,571 0.6 12,812 12,255 4.5
ASMs (000,000) 5,822 6,012 (3.2) 16,735 16,825 (0.5)
Passenger load factor 79.0% 76.0% 3.0pts 76.6% 72.8% 3.8pts
Yield per passenger mile
(in cents) 13.57 12.62 7.5 12.93 12.61 2.5
Operating revenue per ASM
(in cents) 11.84 10.53 12.4 10.93 10.11 8.1
Operating expenses
per ASM (a) (in cents) 10.46 9.84 6.1 10.86 10.28 5.6
Operating expense per
ASM excluding fuel,
navigation fee recovery,
restructuring and
impairment charges (a)
(in cents) 7.53 7.35 2.4 8.04 7.95 1.2
Raw fuel cost
per gallon (a) $1.99 $1.40 42.2 $1.78 $1.30 37.2
GAAP fuel cost
per gallon (a) $1.95 $1.36 43.4 $1.74 $1.26 38.3
Economic fuel
cost per gallon (a) $1.56 $1.27 23.0 $1.46 $1.21 20.8
Fuel gallons (000,000) 90.4 95.8 (5.6) 260.8 267.6 (2.5)
Average number
of employees 8,961 10,201 (12.2) 9,108 10,147 (10.2)
Aircraft utilization
(blk hrs/day) 10.9 11.8 (7.6) 10.8 11.1 (2.7)
Operating fleet
at period-end 110 107 2.8 110 107 2.8
NM = Not Meaningful
(a) See Note A.
Horizon Air Financial and Statistical Data
Three Months Ended Nine Months Ended
September 30, September 30,
Financial Data % %
(in millions): 2005 2004 Change 2005 2004 Change
Operating Revenues:
Passenger $151.2 $134.5 12.4 $405.8 $360.4 12.6
Freight and mail 1.0 1.0 0.0 2.9 3.0 (3.3)
Other - net 1.5 3.8 (60.5) 6.8 10.9 (37.6)
Total Operating Revenues 153.7 139.3 10.3 415.5 374.3 11.0
Operating Expenses:
Wages and benefits 45.3 39.7 14.1 131.6 122.1 7.8
Contracted services 6.1 5.0 22.0 17.7 15.4 14.9
Aircraft fuel 27.5 18.2 51.1 70.3 48.4 45.2
Aircraft maintenance 11.9 9.9 20.2 31.1 26.6 16.9
Aircraft rent 17.5 18.6 (5.9) 52.8 56.0 (5.7)
Food and beverage service 0.7 0.6 16.7 1.9 1.6 18.8
Other selling
expenses and commissions 8.1 6.7 20.9 22.1 19.9 11.1
Depreciation
and amortization 4.1 3.4 20.6 12.0 9.7 23.7
Landing fees and
other rentals 12.2 11.0 10.9 35.7 31.2 14.4
Other 10.1 9.4 7.4 31.0 31.2 (0.6)
Impairment of aircraft
and related spare parts -- -- NM -- 2.8 NM
Total Operating Expenses 143.5 122.5 17.1 406.2 364.9 11.3
Operating Income 10.2 16.8 NM 9.3 9.4 NM
Interest income 0.3 0.3 1.0 0.9
Interest expense (1.6) (0.9) (4.3) (3.2)
Interest capitalized 0.2 0.1 0.4 0.4
Fuel hedging gains 8.1 8.1 26.5 11.2
Other - net 0.1 -- 0.1 --
7.1 7.6 23.7 9.3
Income Before Income
Tax and Accounting Change $17.3 $24.4 NM $33.0 $18.7 NM
Operating Statistics:
Revenue passengers (000) 1,755 1,641 6.9 4,868 4,362 11.6
RPMs (000,000) 683 601 13.6 1,843 1,586 16.2
ASMs (000,000) 911 830 9.8 2,542 2,314 9.9
Passenger load factor 75.0% 72.4% 2.6pts 72.5% 68.5% 4.0pts
Yield per passenger mile
(in cents) 22.14 22.38 (1.1) 22.02 22.73 (3.1)
Operating revenue per ASM
(in cents) 16.87 16.78 0.5 16.35 16.18 1.0
Operating expenses
per ASM (a) (in cents) 15.75 14.76 6.7 15.98 15.77 1.3
Operating expense per ASM
excluding fuel and
impairment charges (a)
(in cents) 12.73 12.57 1.3 13.21 13.56 (2.6)
Raw fuel
cost per gallon (a) $2.04 $1.44 42.0 $1.85 $1.34 38.3
GAAP fuel
cost per gallon (a) $2.00 $1.40 43.1 $1.82 $1.30 40.0
Economic fuel
cost per gallon (a) $1.62 $1.31 23.7 $1.54 $1.26 22.3
Fuel gallons (000,000) 13.7 13.0 5.4 38.6 37.2 3.8
Average number
of employees 3,508 3,439 2.0 3,428 3,399 0.9
Aircraft utilization
(blk hrs/day) 9.0 8.7 3.4 8.6 8.3 3.6
Operating fleet
at period-end 65 65 0.0 65 65 0.0
NM = Not Meaningful
(a) See Note A.
Note A:
Pursuant to Item 10 of Regulation S-K, we are providing disclosure of the reconciliation of reported non-GAAP financial measures to their most directly comparable financial measures reported on a GAAP basis. The non-GAAP financial measures provide management the ability to measure and monitor performance both with and without the cost of aircraft fuel (including the gains and losses associated with our fuel hedging program where appropriate), the navigation fee recovery, restructuring charges or adjustments thereto, and aircraft impairment charges. Because the cost and availability of aircraft fuel are subject to many economic and political factors beyond our control and we record changes in the fair value of our hedge portfolio in our income statement, it is our view that the measurement and monitoring of performance without fuel is important. In addition, we believe the disclosure of financial performance without impairment and restructuring charges is useful to investors. Finally, these non-GAAP financial measures are also more comparable to financial measures reported to the Department of Transportation by other major network airlines.
The following tables reconcile our non-GAAP financial measures to the most directly comparable GAAP financial measures for both Alaska Airlines, Inc. and Horizon Air Industries, Inc.:
Alaska Airlines, Inc.:
($ in millions) Three Months Ended Nine Months Ended
September 30, September 30
Unit cost reconciliations: 2005 2004 2005 2004
Operating expenses $608.9 $591.8 $1,817.5 $1,730.3
ASMs (000,000) 5,822 6,012 16,735 16,825
Operating expenses per ASM
(in cents) 10.46 9.84 10.86 10.28
Operating expenses $608.9 $591.8 $1,817.5 $1,730.3
Less: aircraft fuel (176.6) (130.2) (455.7) (336.4)
Less: restructuring charges 1.4 (27.5) (20.7) (27.5)
Add: navigation fee recovery 4.7 7.7 4.7 7.7
Less: impairment of aircraft
and related spare parts -- -- -- (36.8)
Operating expenses excluding
fuel, navigation fee recovery,
restructuring and
impairment charges $438.4 $441.8 $1,345.8 $1,337.3
ASMs (000,000) 5,822 6,012 16,735.0 16,825
Operating expenses per ASM
excluding fuel, navigation
fee recovery, restructuring
and impairment charges
(in cents) 7.53 7.35 8.04 7.95
Reconciliation from GAAP income before taxes and accounting change:
Income before taxes and
accounting change, excluding
mark-to-market hedging gains,
navigation fee recovery,
restructuring and
impairment charges $106.0 $64.1 $85.3 $24.8
Add: mark-to-market hedging
gains included in nonoperating
income (expense) 19.9 50.3 100.2 70.4
Less: restructuring charges 1.4 (27.5) (20.7) (27.5)
Add: navigation fee recovery
and related interest received 5.7 11.0 5.7 11.0
Less: impairment of aircraft
and related spare parts -- -- -- (36.8)
GAAP income before taxes
and accounting change
as reported $133.0 $97.9 $170.5 $41.9
Aircraft fuel reconciliations:
Three Months Ended September 30
2005 2004
(000s) Cost/Gal (000s) Cost/Gal
Fuel expense before hedge
activities ("raw" or
"into-plane" fuel cost) $179.5 $1.99 $133.7 $1.40
Less: gains on settled hedges
included in fuel expense (2.9) ($0.04) (3.5) (0.04)
GAAP fuel expense $176.6 $1.95 $130.2 $1.36
Less: gains on settled hedges
included in nonoperating
income (expense) (34.9) ($0.39) (8.5) (0.09)
Economic fuel expense $141.7 $1.56 $121.7 $1.27
Fuel gallons (000,000) 90.4 95.8
Mark-to-market gains included
in non-operating income
(expense) related to hedges
that settle in future periods,
net of the reclassification
of previously recorded
mark-to-market gains to gains
on settled hedges included
in nonoperating income
(expense) $19.9 $50.3
Nine Months Ended September 30
2005 2004
(000s) Cost/Gal (000s) Cost/Gal
Fuel expense before hedge
activities ("raw" or
"into-plane" fuel cost) $465.2 $1.78 $347.4 $1.30
Less: gains on settled hedges
included in fuel expense (9.5) (0.04) (11.0) (0.04)
GAAP fuel expense $455.7 $1.74 $336.4 $1.26
Less: gains on settled hedges
included in nonoperating
income (expense) (71.9) (0.28) (11.7) (0.05)
Economic fuel expense $383.8 $1.46 $324.7 $1.21
Fuel gallons (000,000) 260.8 267.6
Mark-to-market gains included
in non-operating income
(expense) related to hedges
that settle in future periods,
net of the reclassification
of previously recorded
mark-to-market gains to gains
on settled hedges included
in nonoperating income
(expense) $100.2 $70.4
Horizon Air Industries, Inc.
($ in millions) Three Months Ended Nine Months Ended
September 30, September 30,
Unit cost reconciliations: 2005 2004 2005 2004
Operating expenses $143.5 $122.5 $406.2 $364.9
ASMs (000,000) 911 830 2,542 2,314
Operating expenses per ASM
(in cents) 15.75 14.76 15.98 15.77
Operating expenses $143.5 $122.5 $406.2 $364.9
Less: aircraft fuel (27.5) (18.2) (70.3) (48.4)
Less: impairment of aircraft
and related spare parts -- -- -- (2.8)
Operating expenses excluding
fuel and impairment charge $116.0 $104.3 $335.9 $313.7
ASMs (000,000) 911 830 2,542 2,314
Operating expenses per ASM
excluding fuel and
impairment charge
(in cents) 12.73 12.57 13.21 13.56
Reconciliation from GAAP income before taxes and accounting change:
Income before taxes and accounting
change, excluding impairment
charge and mark-to-market
hedging gains $14.4 $17.5 $17.4 $11.9
Add: mark-to-market hedging
gains included in nonoperating
income (expense) 2.9 6.9 15.6 9.6
Less: impairment of aircraft
and related spare parts -- -- -- (2.8)
GAAP income before taxes and
accounting change as reported $17.3 $24.4 $33.0 $18.7
Aircraft fuel reconciliations:
Three Months Ended September 30,
2005 2004
(000s) Cost/Gal (000s) Cost/Gal
Fuel expense before
hedge activities ("raw" or
"into-plane" fuel cost) $28.0 $2.04 $18.7 $1.44
Less: gains on settled hedges
included in fuel expense (0.5) (0.04) (0.5) (0.04)
GAAP fuel expense $27.5 $2.00 $18.2 $1.40
Less: gains on settled hedges
included in nonoperating
income (expense) (5.2) (0.38) (1.2) (0.09)
Economic fuel expense $22.3 $1.62 $17.0 $1.31
Fuel gallons (000,000) 13.7 13.0
Mark-to-market gains included in
non-operating income (expense)
related to hedges that settle
in future periods, net of the
reclassification of previously
recorded mark-to-market gains
to gains on settled hedges
included in nonoperating
income (expense) $2.9 $6.9
Nine Months Ended September 30,
2005 2004
(000s) Cost/Gal (000s) Cost/Gal
Fuel expense before
hedge activities ("raw" or
"into-plane" fuel cost) $71.6 $1.85 $49.9 $1.34
Less: gains on settled hedges
included in fuel expense (1.3) (0.03) (1.5) (0.04)
GAAP fuel expense $70.3 $1.82 $48.4 $1.30
Less: gains on settled hedges
included in nonoperating
income (expense) (10.9) (0.28) (1.6) (0.04)
Economic fuel expense $59.4 $1.54 $46.8 $1.26
Fuel gallons (000,000) 38.6 37.2
Mark-to-market gains included in
non-operating income (expense)
related to hedges that settle
in future periods, net of the
reclassification of previously
recorded mark-to-market gains
to gains on settled hedges
included in nonoperating
income (expense) $15.6 $9.6
Air Group Net Income and EPS Reconciliation:
The following table reconciles Alaska Air Group, Inc.’s net income and diluted income per share during 2005 and 2004 excluding the cumulative effect of the accounting change, mark-to-market hedging gains net of related reclassifications, the navigation fee recovery, and restructuring and impairment charges to the reported GAAP amounts (in millions except per share amounts):
Three Months Ended September 30,
2005 2004
Dollars Diluted EPS Dollars Diluted EPS
Net income and diluted
EPS excluding
mark-to-market hedging gains,
navigation fee recovery,
restructuring and
impairment charges $71.5 $2.16 $50.7 $1.58
Mark-to-market hedging gains,
net of tax 14.2 0.42 32.8 1.01
Navigation fee recovery,
net of tax 3.6 0.11 6.3 0.19
Restructuring charges, net of tax 0.9 0.02 (15.8) (0.49)
Reported GAAP amounts $90.2 $2.71 $74.0 $2.29
Nine Months Ended September 30,
2005 2004
Dollars Diluted EPS Dollars Diluted EPS
Net income and diluted
EPS excluding the
cumulative effect of
the accounting change,
mark-to-market hedging gains,
navigation fee recovery,
restructuring and
impairment charges $54.4 $1.74 $19.5 $0.68
Cumulative effect of
accounting change, net of tax (90.4) (2.69) -- --
Mark-to-market hedging
gains, net of tax 72.4 2.16 45.9 1.40
Navigation fee recovery,
net of tax 3.6 0.11 6.3 0.19
Restructuring charges,
net of tax (12.9) (0.39) (15.8) (0.48)
Impairment charges, net of tax -- -- (26.3) (0.81)
Reported GAAP amounts $27.1 $0.93 $29.6 $0.98
Air Group EPS Calculations:
The following table summarizes Alaska Air Group, Inc.’s basic and diluted per share calculations for earnings before the accounting change and net income (in millions except per share amounts):
Three Months Nine Months
Ended September 30, Ended September 30,
2005 2004 2005 2004
Basic Earnings Per Share:
Income before accounting change $90.2 $74.0 $117.5 $29.6
Weighted average
shares outstanding 27.502 26.862 27.274 26.820
Income per share
before accounting change $3.28 $2.75 $4.31 $1.10
Cumulative effect of
accounting change, net of tax NA NA $(90.4) NA
Weighted average shares outstanding NA NA 27.274 NA
Per share cumulative effect
of accounting change NA NA $(3.32) NA
Net income $90.2 $74.0 $27.1 $29.6
Weighted average
shares outstanding 27.502 26.862 27.274 26.820
Net income per share $3.28 $2.75 $0.99 $1.10
Diluted Earnings Per Share:
Income before accounting change $90.2 $74.0 $117.5 $29.6
Interest on convertible
notes, net of tax 1.5 1.0 4.0 2.6
Income before
accounting change for
diluted calculation $91.7 $75.0 $121.5 $32.2
Weighted average
shares outstanding 33.857 32.631 33.523 32.691
Income per share before
accounting change $2.71 $2.29 $3.62 $0.98
Cumulative effect of
accounting change, net of tax NA NA $(90.4) NA
Weighted average shares outstanding NA NA 33.523 NA
Per share cumulative effect
of accounting change NA NA $(2.69) NA
Net income $90.2 $74.0 $27.1 $29.6
Interest on convertible
notes, net of tax 1.5 1.0 4.0 2.6
Net income for
diluted calculation $91.7 $75.0 $31.1 $32.2
Weighted average
shares outstanding 33.857 32.631 33.523 32.691
Net income per share $2.71 $2.29 $0.93 $0.98
Forecasted Financial Measures
During our quarterly earnings conference call, we expect to discuss forward-looking forecasted unit cost information for 2005. This forecasted unit cost information includes non-GAAP unit cost estimates which are summarized in the following table together with the most directly comparable GAAP unit cost for both Alaska Airlines, Inc. and Horizon Air Industries, Inc.:
Alaska Airlines Horizon Air
_______________________________ __________________________________
Forecast
of
total
Forecast of oper-
Fore- total Fore- ating
cast operating Fore- cast cost
of Fore- cost per cast of per
Forecast fuel cast avail- of cost fuel avail-
of cost per cost of able per cost able
available per restruc- seat avail- per seat
seat mile, avail- turing mile, able avail- mile,
excluding fuel, able charges as seat able as re-
navigation seat per reported mile, seat ported
fee recovery mile avail- on a exclud- mile on a
and (See able GAAP ing (See GAAP
restructuring Note seat basis fuel Note basis
charges 1) mile (cents) (cents) 1) (cents)
Fourth quarter
2005 7.8 3.1 -- 10.9 13.8 3.2 17.0
Full year
2005 8.0 2.8 0.1 10.9 13.4 2.9 16.3
Note 1: Our forecast of fuel costs is based on anticipated gallons consumed and estimated fuel cost per gallon for both Alaska and Horizon. The estimate also excludes the benefit from settled hedges recorded in other non- operating income as it does not impact our operating cost per available seat mile as presented on a GAAP basis. Given the volatility of fuel prices, readers should be cautioned that actual fuel expense will likely differ from the forecast above.
SOURCE: Alaska Airlines
CONTACT: Brad Tilden, +1-206-392-5362, or Amanda Tobin, +1-206-392-5134,
both of Alaska Airlines
Web site: http://www.alaskaair.com/
