Both Alaska Air Group investors and its 13,000 employees will be rewarded soon for 2014’s record profits recorded by the SeaTac-based air carrier holding company, the airline said Thursday.
Alaska said it has increased its quarterly dividend by 60 percent to 20 cents a share payable on March 10. And Monday it will pay its employees an annual bonus that in most cases will be the equivalent of an extra month’s pay.
Those two bonuses are a result in part of record 2014 earnings the airline company reported Thursday of $571 million, or $4.18 a share, compared with $383 million, or 2.70 a share, the airline earned in 2013. That’s more than a 49 percent increase. Alaska Air Group owns both Alaska Airlines and its regional sister airline, Horizon Air.
Fourth quarter results excluding special items were a profit of $125 million, or 94 cents a share, compared with $77 million, or 55 cents a share, in the fourth quarter of 2013. Those earnings beat average analysts’ estimates by one cent a share.
Alaska’s shares closed at $67.94 a share Thursday, up 4.56 percent.
Those robust earnings came in spite of aggressive new competition from Atlanta-based Delta Air Lines at Alaska’s principal hub, Seattle-Tacoma International Airport. Alaska controls some 54 percent of the traffic at Sea-Tac, more than three times the amount handled by Delta, the airport’s second most popular carrier.
Alaska’s earnings, like those of most airlines worldwide, were helped by the steep drop in the price of jet fuel. The airline’s economic cost of fuel fell 17 percent in the quarter to $2.64 a gallon.
Like most airlines, Alaska told Wall Street analysts Thursday that it doesn’t intend to lower passenger fares because of the fuel cost decreases. Those fares will be governed by supply and demand, said Andrew Harrison, Alaska senior vice president of planning and revenue management.
The airline is rewarding its faithful travelers, members of its Mileage Plus frequent flier program, with one free checked bag per flight in January. That program is aimed not only at helping frequent fliers but also attracting new members to the program.
The airline saw its Mileage Plan membership grow by some 11.5 percent in part because of that promotion. That growth is twice the average over the last five years, said Alaska executives.
The record earnings also boosted several other measures of the airline’s performance. The air group reported a 17.2 percent adjusted pre-tax margin in 2014 compared with 12.4 percent in 2013.
The holding company’s return on invested capital totaled 18.6 percent last year, five percentage points higher than the year before.
In addition to setting new financial benchmarks, the airline company earned several service distinctions. Alaska was named the best domestic airline for the second year in a row in 2014 by the Wall Street Journal, and the company won the J.D. Power and Associates award for the highest customer satisfaction among traditional network carriers for the seventh year running.
Alaska Chairman Brad Tilden said he expects Alaska will be named the most on-time legacy carrier for 2014 by Flightstats.com in February.
New airliners equipped with fuel-saving split scimitar winglets are expected to cut the airline’s costs in 2015, and a program to charge passengers extra for premium seats such as exit row seats beginning in the second quarter this year will add to the airline’s ancillary revenues, the company told Wall Street analysts.