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Alaska Air Group Reports Fourth Quarter Results
SEATTLE--(BUSINESS WIRE)--Jan. 30, 2003--Alaska Air Group, Inc. (NYSE:ALK) today reported a fourth quarter net loss of $43.1 million, or $1.62 per share, compared with a net loss of $37.4 million, or $1.41 per share, during the corresponding quarter in 2001.
The company's fourth quarter results for 2001 include pre-tax compensation of $52.3 million that was received pursuant to the Air Transportation Safety and System Stabilization Act and a $10.2 million special charge related to the retirement of Horizon's F-28 fleet. Excluding these items, the company lost $63.9 million or $2.41 per share in the fourth quarter of 2001.
For the full year, Alaska Air Group lost $118.6 million or $4.47 per share in 2002. Included in the company's 2002 full year results is a $51.4 million charge related to the write off of goodwill in connection with the adoption of Statement of Financial Accounting Standards No. 142. Excluding this charge, the company lost $67.2 million or $2.53 per share versus a loss of $43.4 million or $1.64 per share in 2001. Due to the September 11 terrorist acts, year over year comparisons of both financial and operational information are significantly impacted.
"As expected, it was a difficult quarter, ending yet another difficult year for both the industry and Alaska Air Group," said John F. Kelly, chairman and chief executive officer. "And yet as difficult as it was, we continued to outperform most of the industry by maintaining our focus on delivering an award-winning product, by implementing further cost management initiatives, and by strengthening our network through the re-deployment of a portion of our fleet to strategic new markets. We expect that further changes in our industry will occur, but feel that we're well positioned to deal with the challenges and opportunities that lie ahead."
Operationally, Alaska Airlines' passenger traffic in the fourth quarter increased 15.6 percent on a capacity increase of 15.5 percent. Load factor increased 0.1 points to 66.5 percent. The airline's operating revenue per available seat mile (ASM) decreased 3.4 percent, while its operating cost per ASM excluding fuel decreased 8.9 percent. Alaska's pretax loss was $58.6 million compared to a pretax loss of $18.8 million a year earlier. Alaska's 2001 pretax income includes $52.9 million of U.S. government compensation.
Horizon Air's passenger traffic in the fourth quarter increased
-
28.7 percent on a 33.3 percent capacity increase. Load factor decreased by 2.2 points to 61.1 percent. The airline's operating revenue per ASM decreased 8.8 percent, while its operating cost per ASM excluding special charge decreased 24.6 percent. Excluding fuel and special charge, cost per ASM decreased 26.8 percent. Horizon's pretax loss was $5.8 million, compared to a pretax loss of $35.0 million a year earlier. Horizon's 2001 pretax income includes $0.6 million of U.S. government compensation.
Alaska Air Group continues to have a strong cash position at December 31, 2002 with approximately $636 million in cash and marketable securities. The company's debt-to-capital ratio, assuming aircraft operating leases are capitalized at seven times annualized rent, was 77 percent.
During the quarter, the company also recorded a non-cash charge to equity of $87.2 million (net of income taxes of $52.5 million) relating to the defined benefit pension plans that the company sponsors for eligible employees. This change is the result of an unfunded accrued benefit obligation resulting from lower than expected return on plan assets.
A conference call regarding year-end and fourth quarter results will be simulcast via the Internet at 9:00 a.m. Pacific Standard Time. It may be accessed through the company's website at www.alaskaair.com.
This report may contain forward-looking statements that are based on the best information currently available to management. These forward-looking statements 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. Forward-looking statements are indicated by phrases such as "will," "should," "the company believes," "we expect" or any other language indicating a prediction of future events. There can be no assurance that actual developments will be those anticipated by the company. Actual results could differ materially from those projected as a result of a number of factors, some of which the company cannot predict or control. For a discussion of these factors, please see Item 1 of the company's Annual Report on Form 10-K/A for the year ended December 31, 2001.
Alaska Air Group is the parent company of Alaska Airlines, Inc. and Horizon Air Industries, Inc.
ALASKA AIR GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(In Millions Except Per Share Amounts)
Quarter Year
Ended Ended
December December
31 31
----------------- -------------------
Restated Restated
2001 2002 2001 2002
-------- -------- --------- ---------
Operating Revenues:
Passenger $425.0 $485.7 $1,972.4 $2,037.7
Freight and mail 19.0 17.7 86.3 77.1
Other - net 22.1 24.3 94.1 109.3
-------- -------- --------- ---------
Total Operating Revenues 466.1 527.7 2,152.8 2,224.1
-------- -------- --------- ---------
Operating Expenses:
Wages and benefits 207.3 219.3 795.5 858.1
Contracted services 21.7 23.7 86.7 93.0
Aircraft fuel 59.3 79.4 324.3 302.0
Aircraft maintenance 37.7 48.9 181.3 170.2
Aircraft rent 47.4 48.8 186.0 190.4
Food and beverage service 13.7 16.3 58.3 66.2
Commissions 12.3 3.9 60.2 35.0
Other selling expenses 28.5 28.7 124.9 124.9
Depreciation and amortization 37.2 31.8 134.1 132.5
Loss (gain) on sale of assets 3.1 0.9 4.7 0.1
Landing fees and other rentals 36.6 36.4 128.2 140.3
Other 46.1 49.4 184.7 200.3
Special charges 10.2 10.2
-------- -------- --------- ---------
Total Operating Expenses 561.1 587.5 2,279.1 2,313.0
-------- -------- --------- ---------
Operating Loss (95.0) (59.8) (126.3) (88.9)
-------- -------- --------- ---------
Nonoperating Income (Expense):
Interest income 4.0 5.1 22.2 21.2
Interest expense (12.9) (11.5) (47.4) (46.3)
Interest capitalized 1.3 1.2 10.6 2.7
U.S. government compensation 52.3 - 81.4 0.5
Other - net (4.0) 0.1 (4.0) 9.0
-------- -------- --------- ---------
40.7 (5.1) 62.8 (12.9)
-------- -------- --------- ---------
Loss before income tax and
accounting change (54.3) (64.9) (63.5) (101.8)
Income tax benefit (16.9) (21.8) (20.1) (34.6)
-------- -------- --------- ---------
Loss before accounting change (37.4) (43.1) (43.4) (67.2)
Cumulative effect of accounting
change net of income tax - - - (51.4)
-------- -------- --------- ---------
Net Loss $(37.4) $(43.1) $(43.4) $(118.6)
======== ======== ========= =========
Basic and Diluted Loss Per Share $(1.41) $(1.62) $(1.64) $(4.47)
======== ======== ========= =========
Shares used for computation:
Basic and Diluted 26.528 26.556 26.499 26.546
ALASKA AIR GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEET (unaudited)
(In Millions)
Restated
December December
31 31
2001 2002
-------- --------
Cash and marketable securities $661 $636
======== ========
Total current assets 919 967
Property and equipment-net 1,822 1,779
Other assets 210 125
-------- --------
Total assets $2,951 $2,871
======== ========
Current liabilities $752 $775
Long-term debt and capital lease obligations 852 857
Other liabilities and credits 496 583
Shareholders' equity 851 656
-------- --------
Total liabilities and equity $2,951 $2,871
======== ========
SUPPLEMENTAL TABLE
------------------
During 2002 and 2001, the Company's diluted loss per share (EPS) and
net loss were impacted by the following (dollars in millions):
Three Months Ended December 31
2001 (Restated) 2002
--------------- ---------------
Dollars EPS Dollars EPS
------- ------- ------- -------
Net loss and diluted
EPS excluding
non-recurring items $(63.9) $(2.41) $(43.1) $(1.62)
U.S. government
compensation 32.9 1.24 - -
Special charge -
impairment of Horizon
F-28 fleet (6.4) (0.24) - -
------- ------- ------- -------
Reported amounts $(37.4) $(1.41) $(43.1) $(1.62)
======= ======= ======= =======
Year Ended December 31
2001 (Restated) 2002
--------------- ----------------
Dollars EPS Dollars EPS
------- ------- -------- -------
Net loss and diluted
EPS excluding
non-recurring items $(88.3) $(3.34) $(67.7) $(2.55)
U.S. government
compensation 51.3 1.94 0.5 0.02
Special charge -
impairment of Horizon
F-28 fleet (6.4) (0.24) - -
Change in accounting
principle related to
goodwill - $ - (51.4) $(1.94)
------- ------- -------- -------
Reported amounts $(43.4) $(1.64) $(118.6) $(4.47)
======= ======= ======== =======
ALASKA AIRLINES FINANCIAL AND STATISTICAL DATA
Quarter Ended December 31
-----------------------------------------
Restated %
Financial Data (in millions): 2001 2002 Change
-------- ------- ----------
Operating Revenues:
Passenger $349.6 $392.2 12.2%
Freight and mail 17.7 16.6 -6.2%
Other - net 18.2 21.0 15.4%
-----------------------
Total Operating Revenues 385.5 429.8 11.5%
-----------------------
Operating Expenses:
Wages and benefits 166.4 179.9 8.1%
Contracted services 19.0 20.4 7.4%
Aircraft fuel 49.9 67.2 34.7%
Aircraft maintenance 29.7 41.9 41.1%
Aircraft rent 33.6 32.4 -3.6%
Food and beverage service 13.2 15.6 18.2%
Commissions 13.6 7.6 -44.1%
Other selling expenses 23.8 23.1 -2.9%
Depreciation and amortization 30.0 28.4 -5.3%
Loss on sale of assets 3.2 1.0 -68.8%
Landing fees and other
rentals 28.7 28.3 -1.4%
Other 35.4 38.0 7.3%
-----------------------
Total Operating Expenses 446.5 483.8 8.4%
-----------------------
Operating Loss (61.0) (54.0) -11.5%
-----------------------
Interest income 4.4 5.7
Interest expense (12.9) (11.5)
Interest capitalized 0.9 1.0
U.S. government compensation 52.9 -
Other - net (3.1) 0.2
-----------------------
42.2 (4.6)
-----------------------
Loss Before Income Tax $(18.8) $(58.6) NM
=======================
Operating Statistics:
Revenue passengers (000) 3,025 3,367 11.3%
RPMs (000,000) 2,736 3,164 15.6%
ASMs (000,000) 4,121 4,758 15.5%
Passenger load factor 66.4% 66.5% 0.1 pts
Breakeven load factor 82.2% 78.4% (3.7)pts
Yield per passenger mile 12.78 (cents) 12.40 (cents) -3.0%
Operating revenue per ASM 9.35 (cents) 9.03 (cents) -3.4%
Operating expenses per ASM 10.84 (cents) 10.17 (cents) -6.2%
Expense per ASM excluding fuel 9.62 (cents) 8.76 (cents) -8.9%
Fuel cost per gallon 71.9 (cents) 84.7 (cents) 17.8%
Fuel gallons (000,000) 69.6 79.3 13.9%
Average number of employees 9,834 10,065 2.3%
Aircraft utilization (blk
hrs/day) 9.2 10.3 12.0%
Operating fleet at period-end 101 102 1.0%
Year Ended December 31
--------------------------------------------
Financial Data (in Restated %
millions): 2001 2002 Change
--------- --------- ----------
Operating Revenues:
Passenger $1,607.6 $1,667.8 3.7%
Freight and mail 78.2 72.1 -7.8%
Other - net 77.2 93.2 20.7%
--------------------------
Total Operating Revenues 1,763.0 1,833.1 4.0%
--------------------------
Operating Expenses:
Wages and benefits 642.9 705.5 9.7%
Contracted services 76.0 80.7 6.2%
Aircraft fuel 269.8 257.3 -4.6%
Aircraft maintenance 129.7 145.2 12.0%
Aircraft rent 137.6 128.2 -6.8%
Food and beverage service 55.5 63.5 14.4%
Commissions 64.1 48.2 -24.8%
Other selling expenses 102.7 101.9 -0.8%
Depreciation and
amortization 106.1 114.2 7.6%
Loss on sale of assets 5.0 1.7 -66.0%
Landing fees and other
rentals 99.5 110.5 11.1%
Other 145.7 150.7 3.4%
--------------------------
Total Operating Expenses 1,834.6 1,907.6 4.0%
--------------------------
Operating Loss (71.6) (74.5) 4.1%
--------------------------
Interest income 26.0 23.2
Interest expense (47.4) (46.3)
Interest capitalized 7.5 2.1
U.S. government compensation 71.6 0.3
Other - net (2.5) 7.9
--------------------------
55.2 (12.8)
--------------------------
Loss Before Income Tax $(16.4) $(87.3) NM
==========================
Operating Statistics:
Revenue passengers (000) 13,668 14,154 3.6%
RPMs (000,000) 12,249 13,186 7.6%
ASMs (000,000) 17,919 19,360 8.0%
Passenger load factor 68.4% 68.1% (0.3)pts
Breakeven load factor 73.5% 73.1% (0.4)pts
Yield per passenger mile 13.12 (cents) 12.65 (cents) -3.6%
Operating revenue per ASM 9.84 (cents) 9.47 (cents) -3.8%
Operating expenses per ASM 10.24 (cents) 9.85 (cents) -3.8%
Expense per ASM excluding
fuel 8.73 (cents) 8.52 (cents) -2.4%
Fuel cost per gallon 88.3 (cents) 79.6 (cents) -9.9%
Fuel gallons (000,000) 305.7 323.3 5.8%
Average number of employees 10,115 10,142 0.3%
Aircraft utilization (blk
hrs/day) 10.4 10.6 1.9%
Operating fleet at period-end 101 102 1.0%
NM = Not Meaningful
HORIZON AIR FINANCIAL AND STATISTICAL DATA
Quarter Ended December 31
----------------------------------------
Restated %
Financial Data (in millions): 2001 2002 Change
-------- ------ -----------
Operating Revenues:
Passenger $79.0 $97.9 23.9%
Freight and mail 1.3 1.1 -15.4%
Other - net 4.7 4.4 -6.4%
----------------------
Total Operating Revenues 85.0 103.4 21.6%
----------------------
Operating Expenses:
Wages and benefits 40.9 39.4 -3.7%
Contracted services 3.5 4.3 22.9%
Aircraft fuel 9.3 12.2 31.2%
Aircraft maintenance 8.0 7.0 -12.5%
Aircraft rent 13.8 16.3 18.1%
Food and beverage service 0.6 0.7 16.7%
Commissions 2.2 0.7 -68.2%
Other selling expenses 4.7 5.6 19.1%
Depreciation and amortization 6.9 3.2 -53.6%
Loss on sale of assets (0.1) (0.1) NM
Landing fees and other rentals 8.1 8.4 3.7%
Other 10.4 11.1 6.7%
Special charges 10.2 -100.0%
----------------------
Total Operating Expenses 118.5 108.8 -8.2%
----------------------
Operating Loss (33.5) (5.4) NM
----------------------
Interest income
Interest expense (0.3) (0.5)
Interest capitalized 0.3 0.2
U.S. government compensation (0.6)
Other - net (0.9) (0.1)
----------------------
(1.5) (0.4)
----------------------
Loss Before Income Tax $(35.0) $(5.8) -83.4%
======================
Operating Statistics:
Revenue passengers (000) 1,034 1,194 15.5%
RPMs (000,000) 300 386 28.7%
ASMs (000,000) 474 632 33.3%
Passenger load factor 63.3% 61.1% (2.2)pts
Breakeven load factor 83.4% 65.0% (18.7)pts
Yield per passenger mile 26.33 (cents) 25.35 (cents) -3.7%
Operating revenue per ASM (a) 17.93 (cents) 16.36 (cents) -8.8%
Operating expenses per ASM (a) 22.85 (cents) 17.22 (cents) -24.6%
Expense per ASM excluding fuel 20.89 (cents) 15.29 (cents) -26.8%
Fuel cost per gallon 77.4 (cents) 87.7 (cents) 13.3%
Fuel gallons (000,000) 12.0 13.9 15.8%
Average number of employees 3,534 3,518 -0.5%
Aircraft utilization (blk
hrs/day) 6.7 7.5 11.9%
Operating fleet at period-end 60 63 5.0%
Year Ended December 31
--------------------------------------
Financial Data (in Restated %
millions): 2001 2002 Change
-------- ------- -----------
Operating Revenues:
Passenger $380.0 $389.5 2.5%
Freight and mail 8.1 5.0 -38.3%
Other - net 20.3 20.7 2.0%
-----------------------
Total Operating Revenues 408.4 415.2 1.7%
-----------------------
Operating Expenses:
Wages and benefits 152.6 152.6 0.0%
Contracted services 13.8 16.6 20.3%
Aircraft fuel 54.5 44.7 -18.0%
Aircraft maintenance 51.6 25.1 -51.4%
Aircraft rent 48.4 62.2 28.5%
Food and beverage service 2.9 2.7 -6.9%
Commissions 11.3 6.4 -43.4%
Other selling expenses 22.2 23.0 3.6%
Depreciation and
amortization 26.7 17.0 -36.3%
Loss on sale of assets (0.4) (1.6) NM
Landing fees and other
rentals 30.2 31.2 3.3%
Other 37.7 48.7 29.2%
Special charges 10.2 -100.0%
-----------------------
Total Operating Expenses 461.7 428.6 -7.2%
-----------------------
Operating Loss (53.3) (13.4) NM
-----------------------
Interest income 0.7
Interest expense (3.0) (2.1)
Interest capitalized 3.0 0.6
U.S. government compensation 9.8 0.2
Other - net (1.6) 1.2
-----------------------
8.2 0.6
-----------------------
Loss Before Income Tax $(45.1) $(12.8) NM
=======================
Operating Statistics:
Revenue passengers (000) 4,668 4,815 3.1%
RPMs (000,000) 1,350 1,514 12.1%
ASMs (000,000) 2,148 2,427 13.0%
Passenger load factor 62.8% 62.4% (0.4)pts
Breakeven load factor 70.8% 65.0% (5.8)pts
Yield per passenger mile 28.15 (cents) 25.73 (cents) -8.6%
Operating revenue per
ASM (a) 19.02 (cents) 17.11 (cents) -10.0%
Operating expenses per
ASM (a) 21.02 (cents) 17.66 (cents) -16.0%
Expense per ASM excluding
fuel 18.48 (cents) 15.82 (cents) -14.4%
Fuel cost per gallon 93.4 (cents) 82.0 (cents) -12.2%
Fuel gallons (000,000) 58.3 54.5 -6.5%
Average number of employees 3,764 3,476 -7.7%
Aircraft utilization (blk
hrs/day) 7.6 7.5 -1.3%
Operating fleet at period-
end 60 63 5.0%
(a) 2001 amounts exclude the impact of a special charge in December
2001.
NM = Not Meaningful
--30--ATR/se*
| CONTACT: | Alaska Air Group, Inc. |
|---|---|
| Brad Tilden, 206/433-3362 | |
| or | |
| Lou Cancelmi, 206/433-3170 | |
