Alaska Air doubles earnings in record first quarter

Staff writerApril 25, 2014 

Alaska Airlines 737

© GEORGE HALL/CLAY LACY 2005 — Alaska Airlines

Despite increasing competition from Atlanta's Delta Air Lines at Sea-Tac Airport, Alaska Air Group Friday reported record first quarter earnings of $89 million or $1.28 a share.

That result was more than double the $44 million or 62 cents a share Alaska earned in the first quarter of 2013.

A poll of Wall Street analysts before the results were announced had produced an average prediction of a $1.24 per share earnings.

Despite the better-than-predicted results, Alaska shares were down $1.32 a share to $93.43 in trading Friday on the New York Stock Exchange.

Alaska Air Group is the holding company for SeaTac-based Alaska Airlines and its regional sister carrier, Horizon Air.

Other financial results the airline company reported Friday were also positive.

* Alaska achieved a trailing 12-month return on invested capital of 14.8 percent compared with 13.4% in the 12 months that ended March 31, 2013.

* The company's pre-tax margin was 11.8 percent.

* The airline holding company reduced its adjusted debt-to-total-capitalization ratio by 3 percent, to 32 percent, from December 31, 2013.

* Despite returning profits to stockholders in the form of a 25-cent-per-share dividend and $30 million in stock buybacks in the quarter, the company held $1.4 billion in cash and securities at the end of the quarter.

Alaska in the last year has faced new competition from Delta Air Lines, which has added new flights from Sea-Tac Airport to some of Alaska's high traffic cities.  The Atlanta-based carrier has announced more new flights domestic flights from Sea-tac  in the coming months as it moves to provide feed traffic to its enhanced schedule of international flights from Sea-Tac.

Delta recently has began flying from Sea-Tac to London, and it plans new non-stop flights to Hong Kong and Seoul and complement its existing international routes from Sea-Tac to Paris, Amsterdam, Beijing, Shanghai and Tokyo's two airports, Haneda and Narita.

Alaska chief executive Brad Tilden said Friday that Delta's schedule additions in Seattle will create overcapacity in some markets.  

But Tilden said he believes Alaska will weather that competitive storm.

"In the airline industry, water seeks its own level," he said. "I think we'll eventually see that happen in markets here."

As Delta adds capacity in the Seattle market, he said, other airlines are reducing capacity.  United, for instance, is halting flights to Anchorage from Seattle, and Virgin America is eliminating its flights from San Francisco to Anchorage.

While Alaska has seen its code-share flying with Delta passengers decline as Delta has added more of its own flights, Alaska has seen other airlines', particularly American's, code share business with Alaska increase.



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