If Wall Street analysts were holding their breath fearing that Delta Air Lines’ growing competition would put a big dent in Alaska Air Group’s first quarter earnings, they could breathe easier Thursday.
The SeaTac-based carrier announced earnings early Thursday of $149 million or $1.12 a share in what traditionally has been its weakest quarter. Those figures compare favorably with net income of $94 million or 68 cents a share in the first quarter of 2014.
The more favorable results beat Wall Street expectations of $1.10 a share. The first quarter was the fourth consecutive quarter in which the airline holding company, parent of Alaska Airlines and regional carrier Horizon Air, beat analysts’ average predictions.
The good results were helped in considerable measure by lower fuel costs, which offset lower average passenger yields brought on by competition on key routes. “Our record first quarter results reflect lower fuel prices, but more importantly the tremendous loyalty of our customers in Seattle and across our system,” said Brad Tilden, the air group’s chief executive. “It is gratifying to see such strong growth and financial results given unprecedented competition. I want to thank our incredible employees who continue to rise to the challenge and deliver outstanding experiences to our customers.”
The challenge Tilden mentioned comes mainly from Atlanta’s Delta Air Lines, which has become Seattle-Tacoma International Airport’s second largest carrier. Delta has made Sea-Tac, which is Alaska’s principal hub, its West Coast hub for international and domestic flights. The airline, has added dozens of flights to its domestic schedule to and from Sea-Tac to support a gaggle of new overseas flights to Asia and Europe. In the process, Delta has entered many markets that have long been bread-and-butter routes for Alaska such as Seattle-Los Angeles, Seattle-San Diego and Seattle-Anchorage.
Alaska has reacted with a major expansion, adding nonstop flights to new destinations from Sea-Tac it had relied on partner airlines such as Delta to serve through their own hubs. Alaska’s good performance earned its own employees incentive pay and bonuses totaling $26 million in the quarter for meeting financial, safety and customer service goals.
In a conference call with analysts and journalists, the company shared several developments: