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Alaska Air Group Reports Second Quarter 2013 Results

SEATTLE, July 25, 2013 /PRNewswire/ --

Financial Highlights:

  • Reported second quarter net income, excluding special items, of $105 million, or $1.47 per diluted share, compared to adjusted net income of $111 million, or $1.53 per diluted share in the prior year quarter. This quarter's results compare to a First Call analyst consensus estimate of $1.51 per share.
  • Recorded net income for the second quarter under Generally Accepted Accounting Principles (GAAP) of $104 million or $1.47 per diluted share, compared to net income of $68 million, or $0.93 per diluted share in 2012.
  • Achieved trailing twelve-month return on invested capital of 13.0 percent compared to 12.3 percent in the twelve months ended June 30, 2012.
  • Declared a $.20 quarterly cash dividend to be paid on August 22.
  • Announced changes to bag and change fee policies effective October 30, estimated to increase revenues by approximately $50 million annually.
  • Extended affinity card agreement with Bank of America through 2017, estimated to generate $55 million in additional cash flows on an annual basis.
  • Lowered adjusted debt-to-total-capitalization ratio by 2.0 percentage points, to 52.0 percent, since Dec. 31, 2012.
  • Repurchased 544,597 shares of common stock for $32 million in the second quarter. For the year the company has repurchased 917,782 shares for $51 million.
  • Held $1.4 billion in unrestricted cash and marketable securities as of June 30, 2013.

Operational Highlights:

  • Ranked "Highest in Customer Satisfaction Among Traditional Network Carriers" in 2013 by J.D. Power and Associates for the sixth year in a row.
  • Received the FAA's "Diamond Certificate of Excellence" award for the 12th consecutive year.
  • Held the No. 1 spot in U.S. Department of Transportation on-time performance among the 10 largest U.S. airlines for the twelve months ended May 2013.
  • Improved employee productivity by 5.5 percent.
  • Signed five-year collective bargaining agreements with Alaska pilots and Horizon flight attendants.

New routes:

  • New routes launched and announced in the second quarter are as follows:

New Non-Stop Routes launched in Q2

New Non-Stop Routes (Launch Date)

Portland to Fairbanks

Anchorage to Fairbanks (3/3/14) - Horizon

San Diego to Lihue

Anchorage to Kodiak (3/3/14) - Horizon

Seattle to Salt Lake City

Anchorage to Las Vegas (12/19)

Anchorage to Phoenix (12/18)

Portland to Boise (11/1) - SkyWest

Portland to Reno (11/8)

Portland to Tucson (11/1)

San Diego to Boise (11/1)

San Diego to Mammoth Lakes (12/19)

Seattle to Colorado Springs (11/1)

Seattle to Omaha (11/7)

Seattle to Steamboat Springs (12/18)

Alaska Air Group, Inc., (NYSE: ALK) today reported second quarter 2013 GAAP net income of $104 million, or $1.47 per diluted share, compared to $68 million, or $0.93 per diluted share in the second quarter of 2012. Excluding the impact of mark-to-market fuel hedge adjustments of $1 million, the company reported adjusted net income of $105 million, or $1.47 per diluted share, compared to adjusted net income of $111 million, or $1.53 per diluted share, in 2012.

"These results represent our 17th consecutive quarter of profitability and the second-best June quarter in our history. I want to thank our employees at Alaska and Horizon who are continuing to work hard to keep us safe and reliable, provide a great experience for our customers, and produce results that make Alaska a great place to invest," CEO Brad Tilden said. "Although our quarterly results were down slightly, our financial performance continues to be very strong. This is why we were very pleased to recently announce the initiation of a quarterly dividend which, combined with our share repurchases, will be a key component of our capital deployment program."

The following table reconciles the company's reported GAAP net income and earnings per diluted share (EPS) during the second quarters of 2013 and 2012 to adjusted amounts:

Three Months Ended June 30,

2013

2012

(in millions, except per-share amounts)

Dollars

Diluted EPS

Dollars

Diluted EPS

Reported GAAP net income

$

104

$

1.47

$

68

$

0.93

Mark-to-market fuel hedge adjustments, net of tax

1

—

43

0.60

Non-GAAP adjusted income and per-share amounts

$

105

$

1.47

$

111

$

1.53

Statistical data, as well as a reconciliation of the reported non-GAAP financial measures, can be found in the accompanying tables. A glossary of financial terms can be found on the last page of this release.

A conference call regarding the second quarter results will be simulcast via the Internet at 8:30 a.m. Pacific time on July 25, 2013. It can be accessed through the company's website at alaskaair.com/investors. For those unable to listen to the live broadcast, a replay will be available after the conclusion of the call.

References in this news release to "Air Group," "company," "we," "us" and "our" refer to Alaska Air Group, Inc. and its subsidiaries, unless otherwise specified. Alaska Airlines, Inc. and Horizon Air Industries, Inc. are referred to as "Alaska" and "Horizon," respectively, and together as our "airlines."

This news release may contain forward-looking statements subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These statements relate to future events and involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different from those indicated by any forward-looking statements. For a comprehensive discussion of potential risk factors, see Item 1A of the company's Annual Report on Form 10-K for the year ended Dec. 31, 2012. Some of these risks include general economic conditions, increases in operating costs including fuel, competition, labor costs and relations, our significant indebtedness, inability to meet cost reduction goals, seasonal fluctuations in our financial results, an aircraft accident, and changes in laws and regulations. All of the forward-looking statements are qualified in their entirety by reference to the risk factors discussed therein. 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 expressly disclaim any obligation to publicly update or revise any forward-looking statements after the date of this report to conform them to actual results. Over time, our actual results, performance or achievements will likely differ from the anticipated results, performance or achievements that are expressed or implied by our forward-looking statements, and such differences might be significant and materially adverse.

Alaska Airlines, a subsidiary of Alaska Air Group (NYSE: ALK), together with its partner regional airlines, serves 95 cities through an expansive network in Alaska, the Lower 48, Hawaii, Canada and Mexico. Alaska Airlines has ranked "Highest in Customer Satisfaction Among Traditional Network Carriers" in the J.D. Power and Associates North America Airline Satisfaction Study SM for six consecutive years from 2008 to 2013. For reservations, visit www.alaskaair.com. For more news and information, visit the Alaska Airlines Newsroom at www.alaskaair.com/newsroom.

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

Alaska Air Group, Inc.






















Three Months Ended June 30,

Six Months Ended June 30,

(in millions, except per-share amounts)

2013

2012

Change

2013

2012

Change

Operating Revenues:










Passenger










        Mainline

$

896

$

863

4

%

1,692

1,586

7

%

        Regional

192

188

2

%

374

361

4

%

    Total passenger revenue

1,088

1,051

4

%

2,066

1,947

6

%

Freight and mail

30

31

(3)

%

56

55

2

%

Other - net

138

132

5

%

268

251

7

%

Total Operating Revenues

1,256

1,214

3

%

2,390

2,253

6

%












Operating Expenses:










Wages and benefits

258

259

—

%

522

515

1

%

Variable incentive pay

21

22

(5)

%

42

38

11

%

Aircraft fuel, including hedging gains and losses

372

433

(14)

%

753

751

—

%

Aircraft maintenance

67

54

24

%

133

105

27

%

Aircraft rent

30

29

3

%

59

57

4

%

Landing fees and other rentals

75

60

25

%

136

123

11

%

Contracted services

54

50

8

%

107

98

9

%

Selling expenses

51

44

16

%

89

85

5

%

Depreciation and amortization

68

66

3

%

136

129

5

%

Food and beverage service

21

20

5

%

41

37

11

%

Other

65

61

7

%

133

126

6

%

Total Operating Expenses

1,082

1,098

(1)

%

2,151

2,064

4

%

Operating Income

174

116

50

%

239

188

27

%












Nonoperating Income (Expense):










Interest income

4

5



9

10


Interest expense

(14)

(17)



(29)

(34)


Interest capitalized

5

3



9

8


Other - net

—

2



1

3



(5)

(7)



(10)

(13)


Income Before Income Tax

169

109



229

176


Income tax expense

65

41



88

67


Net Income

$

104

$

68



141

109














Basic Earnings Per Share:

$

1.49

$

0.95



$

2.00

$

1.53


Diluted Earnings Per Share:

$

1.47

$

0.93



$

1.98

$

1.50


Shares Used for Computation:










Basic

70.252

70.996



70.342

71.069


Diluted

71.159

72.200



71.297

72.325


 

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)


Alaska Air Group, Inc.






(in millions)

June 30, 2013

December 31, 2012

Cash and marketable securities

$

1,429

$

1,252




Total current assets

1,986

1,737

Property and equipment-net

3,725

3,609

Other assets

141

159

Total assets

5,852

5,505




Air traffic liability

724

534

Current portion of long-term debt

110

161

Other current liabilities

922

806

Current liabilities

1,756

1,501

Long-term debt

814

871

Other liabilities and credits

1,739

1,712

Shareholders' equity

1,543

1,421

Total liabilities and shareholders' equity

$

5,852

$

5,505




Debt to Capitalization, adjusted for operating leases

52%:48%

54%:46%




Number of common shares outstanding

70.009

70.377

 

OPERATING STATISTICS SUMMARY (unaudited)

Alaska Air Group, Inc.





















Three Months Ended June 30,

Six Months Ended June 30,

2013

2012

Change

2013

2012

Change

Consolidated Operating Statistics:(a)










Revenue passengers (000)

6,980

6,565

6.3

%

13,326

12,560

6.1

%

RPMs (000,000) "traffic"

7,385

6,869

7.5

%

14,181

13,101

8.2

%

ASMs (000,000) "capacity"

8,547

7,939

7.6

%

16,530

15,283

8.2

%

Load factor

86.4

%

86.5

%

(0.1 pts)

85.8

%

85.7

%

0.1 pts

Yield

14.73

¢

15.29

¢

(3.7)

%

14.56

¢

14.86

¢

(2.0)

%

PRASM

12.73

¢

13.23

¢

(3.8)

%

12.49

¢

12.74

¢

(2.0)

%

RASM

14.70

¢

15.28

¢

(3.8)

%

14.46

¢

14.74

¢

(1.9)

%

CASM excluding fuel(b)

8.31

¢

8.38

¢

(0.8)

%

8.46

¢

8.60

¢

(1.6)

%

Economic fuel cost per gallon(c)

$

3.28

$

3.40

(3.5)

%

$

3.38

$

3.41

(0.9)

%

Fuel gallons (000,000)

113

106

6.6

%

219

206

6.3

%

Average number of full-time equivalent employees

12,059

11,965

0.8

%

12,036

11,899

1.2

%












Mainline Operating Statistics:










Revenue passengers (000)

5,074

4,752

6.8

%

9,608

9,027

6.4

%

RPMs (000,000) "traffic"

6,729

6,231

8.0

%

12,901

11,868

8.7

%

ASMs (000,000) "capacity"

7,743

7,130

8.6

%

14,946

13,705

9.1

%

Load factor

86.9

%

87.4

%

(0.5 pts)

86.3

%

86.6

%

(0.3 pts)

Yield

13.31

¢

13.85

¢

(3.9)

%

13.11

¢

13.36

¢

(1.9)

%

PRASM

11.57

¢

12.10

¢

(4.4)

%

11.32

¢

11.57

¢

(2.2)

%

RASM

13.50

¢

14.13

¢

(4.5)

%

13.24

¢

13.55

¢

(2.3)

%

CASM excluding fuel(b)

7.35

¢

7.46

¢

(1.6)

%

7.47

¢

7.67

¢

(2.6)

%

Economic fuel cost per gallon(c)

$

3.28

$

3.40

(3.6)

%

$

3.37

$

3.40

(0.9)

%

Fuel gallons (000,000)

100

93

7.2

%

193

180

7.3

%

Average number of full-time equivalent employees

9,457

9,165

3.2

%

9,404

9,088

3.5

%

Aircraft utilization

10.9

10.9

(0.2)

%

10.7

10.6

0.9

%

Average aircraft stage length

1,156

1,149

0.6

%

1,188

1,151

3.2

%

Operating fleet

128

120

8 a/c

128

120

8 a/c












Regional Operating Statistics:(d)










Revenue passengers (000)

1,907

1,813

5.2

%

3,718

3,533

5.2

%

RPMs (000,000) "traffic"

656

638

2.8

%

1,280

1,233

3.8

%

ASMs (000,000) "capacity"

804

809

(0.7)

%

1,584

1,578

0.4

%

Load factor

81.6

%

78.9

%

2.7 pts

80.8

%

78.1

%

2.7 pts

Yield

29.29

¢

29.40

¢

(0.3)

%

29.19

¢

29.23

¢

(0.2)

%

PRASM

23.91

¢

23.19

¢

3.2

%

23.60

¢

22.84

¢

3.3

%

Operating fleet (Horizon only)

48

50

(2) a/c

48

50

(2) a/c


(a)      

Except for full-time equivalent employees, data includes information related to third-party regional capacity purchase flying arrangements.

(b)      

See a reconciliation of operating expenses excluding fuel and certain special items and Note A for a discussion of why these measures may be important to investors in the accompanying pages.

(c)      

See a reconciliation of economic fuel cost in the accompanying pages.

(d)      

Data presented includes information related to flights operated by Horizon Air and third-party carriers. 

 

OPERATING SEGMENTS (unaudited)





Alaska Air Group, Inc.


























Three Months Ended June 30, 2013

Alaska









(in millions)

Mainline

Regional

Horizon

Consolidating

Air Group Adjusted(a)

Special Items

Consolidated

Operating revenues












Passenger












    Mainline

$

896

$

—

$

—

$

—

$

896

$

—

$

896

    Regional

192

—

—

192

—

192

        Total passenger revenues

896

192

—

—

1,088

—

1,088

CPA revenues

—

—

91

(91)

—



—

Freight and mail

29

1

—

—

30

—

30

Other-net

120

16

2

—

138

—

138

Total operating revenues

1,045

209

93

(91)

1,256

—

1,256














Operating expenses












Operating expenses, excluding fuel

569

149

84

(92)

710

—

710

Economic fuel

327

44

—

—

371

1

372

Total operating expenses

896

193

84

(92)

1,081

1

1,082














Nonoperating income (expense)












Interest income

4

—

—

—

4

—

4

Interest expense

(9)

—

(4)

(1)

(14)

—

(14)

Other

6

(1)

1

(1)

5

—

5

1

(1)

(3)

(2)

(5)

—

(5)

Income (loss) before income tax

$

150

$

15

$

6

$

(1)

$

170

$

(1)

$

169



Three Months Ended June 30, 2012

Alaska









(in millions)

Mainline

Regional

Horizon

Consolidating

Air Group Adjusted(a)

Special Items

Consolidated

Operating revenues












Passenger












    Mainline

$

863

$

—

$

—

$

—

$

863

$

—

$

863

    Regional

—

188

—

—

188

—

188

        Total passenger revenues

863

188

—

—

1,051

—

1,051

CPA revenues

—

—

89

(89)

—

—

—

Freight and mail

30

1

—

—

31

—

31

Other-net

115

15

2

—

132

—

132

Total operating revenues

1,008

204

91

(89)

1,214

—

1,214














Operating expenses












Operating expenses, excluding fuel

532

139

83

(89)

665

—

665

Economic fuel

317

46

—

—

363

70

433

Total operating expenses

849

185

83

(89)

1,028

70

1,098














Nonoperating income (expense)












Interest income

4

—

—

1

5

—

5

Interest expense

(12)

—

(4)

(1)

(17)

—

(17)

Other

5

—

—

—

5

—

5

(3)

—

(4)

—

(7)

—

(7)

Income (loss) before income tax

$

156

$

19

$

4

$

—

$

179

$

(70)

$

109


(a)

The adjusted column represents the financial information that is reviewed by management to assess performance of operations and determine capital allocations and does not include certain charges.  See Note A for further information in the accompanying pages.

 

 

OPERATING SEGMENTS (unaudited)





Alaska Air Group, Inc.


























Six Months Ended June 30, 2013

Alaska









(in millions)

Mainline

Regional

Horizon

Consolidating

Air Group Adjusted(a)

Special Items

Consolidated

Operating revenues












Passenger












    Mainline

$

1,692

$

—

$

—

$

—

$

1,692

$

—

$

1,692

    Regional

—

374

—

—

374

—

374

        Total passenger revenues

1,692

374

—

—

2,066

—

2,066

CPA revenues

—

—

186

(186)

—

—

—

Freight and mail

54

2

—

—

56

—

56

Other-net

234

31

3

—

268

—

268

Total operating revenues

1,980

407

189

(186)

2,390

—

2,390














Operating expenses












Operating expenses, excluding fuel

1,116

296

173

(187)

1,398

—

1,398

Economic fuel

650

90

—

—

740

13

753

Total operating expenses

1,766

386

173

(187)

2,138

13

2,151














Nonoperating income (expense)












Interest income

9

—

—

—

9

—

9

Interest expense

(21)

—

(7)

(1)

(29)

—

(29)

Other

11

(1)

1

(1)

10

—

10

(1)

(1)

(6)

(2)

(10)

—

(10)

Income (loss) before income tax

$

213

$

20

$

10

$

(1)

$

242

$

(13)

$

229

 

Six Months Ended June 30, 2012

Alaska









(in millions)

Mainline

Regional

Horizon

Consolidating

Air Group Adjusted(a)

Special Items

Consolidated

Operating revenues












Passenger












    Mainline

$

1,586

$

—

$

—

$

—

$

1,586

$

—

$

1,586

    Regional

—

361

—

—

361

—

361

        Total passenger revenues

1,586

361

—

—

1,947

—

1,947

CPA revenues

—

—

176

(176)

—

—

—

Freight and mail

53

2

—

—

55

—

55

Other-net

218

29

4

—

251

—

251

Total operating revenues

1,857

392

180

(176)

2,253

—

2,253














Operating expenses












Operating expenses, excluding fuel

1,051

276

161

(175)

1,313

—

1,313

Economic fuel

611

90

—

—

701

50

751

Total operating expenses

1,662

366

161

(175)

2,014

50

2,064














Nonoperating income (expense)












Interest income

9

—

—

1

10

—

10

Interest expense

(25)

—

(8)

—

(34)

—

(34)

Other

10

—

1

—

11

—

11

(6)

—

(7)

1

(13)

—

(13)

Income (loss) before income tax

$

189

$

26

$

12

$

—

$

226

$

(50)

$

176


(a)

The adjusted column represents the financial information that is reviewed by management to assess performance of operations and determine capital allocations and does not include certain charges.  See Note A for further information in the accompanying pages.

 

FUEL RECONCILIATIONS (unaudited)

Alaska Air Group, Inc.















Three Months Ended June 30,

2013

2012

(in millions, except for per-gallon amounts)

Dollars

Cost/Gallon

Dollars

Cost/Gallon

Raw or "into-plane" fuel cost

$

347

$

3.07

$

351

$

3.29

(Gains) losses on settled hedges

24

0.21

12

0.11

Consolidated economic fuel expense

371

3.28

363

3.40

Mark-to-market fuel hedge adjustment

1

0.01

70

0.66

GAAP fuel expense

$

372

$

3.29

$

433

$

4.06

Fuel gallons

113



106











Six Months Ended June 30,

2013

2012

(in millions, except for per gallon amounts)

Dollars

Cost/Gallon

Dollars

Cost/Gallon

Raw or "into-plane" fuel cost

$

704

$

3.22

$

688

$

3.34

(Gains) losses on settled hedges

36

0.16

13

0.07

Consolidated economic fuel expense

$

740

$

3.38

$

701

$

3.41

Mark-to-market fuel hedge adjustment

13

0.06

50

0.24

GAAP fuel expense

$

753

$

3.44

$

751

$

3.65

Fuel gallons

219



206










Breakout of Fuel Expense:

Three Months Ended June 30,

Six Months Ended June 30,

(in millions)

2013

2012

2013

2012

Mainline economic fuel expense

$

327

$

317

$

650

$

611

Regional economic fuel expense

44

46

90

90

Consolidated economic fuel expense

$

371

$

363

$

740

$

701








Mainline Economic Cost per Gallon Reconciliation:

Three Months Ended June 30,

Six Months Ended June 30,

(in millions, except for per-gallon amounts)

2013

2012

2013

2012

Mainline economic fuel expense

$

327

$

317

$

650

$

611

Mainline fuel gallons

100

93

193

180

Mainline economic cost per gallon

$

3.28

$

3.40

$

3.37

$

3.40

Note A: Pursuant to Regulation G, 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. We believe that consideration of these non-GAAP financial measures may be important to investors for the following reasons:

  • By eliminating fuel expense and certain special items from our cost and unit cost metrics, we believe that we have better visibility into the results of our non-fuel cost-reduction initiatives. Our industry is highly competitive and is characterized by high fixed costs, so even a small reduction in non-fuel operating costs can result in a significant improvement in operating results. In addition, we believe that all domestic carriers are similarly impacted by changes in jet fuel costs over the long run, so it is important for management (and thus investors) to understand the impact of (and trends in) company-specific cost drivers such as labor rates and productivity, airport costs, maintenance costs, etc., which are more controllable by management.
  • Cost per ASM (CASM) excluding fuel and certain special items is one of the most important measures used by management and by the Air Group Board of Directors in assessing quarterly and annual cost performance.
  • Adjusted Income before Income Taxes and CASM excluding fuel (and other items as specified in our plan documents) are important metrics for the employee incentive plan that covers all Air Group employees.
  • CASM excluding fuel and certain special items is a measure commonly used by industry analysts, and we believe it is the basis by which they compare our airlines to others in the industry. The measure is also the subject of frequent questions from investors.
  • Disclosure of the individual impact of certain noted items provides investors the ability to measure and monitor performance both with and without these special items. We believe that disclosing the impact of certain items, such as fleet transition costs, is important because it provides information on significant items that are not necessarily indicative of future performance. Industry analysts and investors consistently measure our performance without these items for better comparability between periods and among other airlines.
  • Although we disclose our passenger unit revenues, we do not (nor are we able to) evaluate unit revenues excluding the impact that changes in fuel costs have had on ticket prices. Fuel expense represents a large percentage of our total operating expenses. Fluctuations in fuel prices often drive changes in unit revenues in the mid-to-long term. Although we believe it is useful to evaluate non-fuel unit costs for the reasons noted above, we would caution readers of these financial statements not to place undue reliance on unit costs excluding fuel as a measure or predictor of future profitability because of the significant impact of fuel costs on our business.

Note B: Air Group has two operating airlines - Alaska Airlines and Horizon Air. Each is a regulated airline with separate management teams primarily in operational roles. To manage the two operating airlines, management views the business in three operating segments. Alaska operates a fleet of passenger jets (Alaska Mainline) and contracts with Horizon, SkyWest Airlines, Inc. (SkyWest), and Peninsula Airways, Inc. (PenAir) for regional capacity under which Alaska receives all passenger revenue from those flights (Alaska Regional). Horizon operates a fleet of turboprop aircraft and sells all of its capacity to Alaska pursuant to a capacity purchase arrangement (Horizon). The Company believes the amounts paid by Alaska to Horizon approximate current market rates received by other regional carriers for similar flying and are available to pay for various Horizon operating expenses such as crew expenses, maintenance, and aircraft ownership costs.  All inter-company revenues and expenses between Alaska and Horizon are eliminated in consolidation.

Glossary of Terms

Mainline - represents flying Boeing 737 jets and all associated revenues and costs

Regional - represents capacity purchased by Alaska from Horizon, SkyWest, and PenAir. In this segment, Alaska Regional records actual on-board passenger revenue, less costs such as fuel, distribution costs, and payments made to Horizon, SkyWest and PenAir under the respective capacity purchased arrangement (CPAs). Additionally, Alaska Regional includes an allocation of corporate overhead such as IT, finance, other administrative costs incurred by Alaska and on behalf of Horizon.

RPMs - revenue passenger miles, or "traffic"; represents the number of seats that were filled with paying passengers; one passenger traveling one mile is one RPM

ASMs - available seat miles, or "capacity"; represents total seats available across the fleet multiplied by the number of miles flown

Load Factor - RPMs as a percentage of ASMs; represents the number of available seats that were filled with paying passengers

Yield - passenger revenue per RPM; represents the average revenue for flying one passenger one mile

PRASM - passenger revenue per ASM; commonly called "passenger unit revenue"

RASM - operating revenue per ASMs, or "unit revenue"; operating revenue includes all passenger revenue, freight & mail, Mileage Plan, and other ancillary revenue; represents the average total revenue for flying one seat one mile

CASM - operating costs per ASM, or "unit cost"; represents all operating expenses including fuel and special items

CASMex - operating costs excluding fuel and special items per ASM; this metric is used to help track progress toward reduction of non-fuel operating costs since fuel is largely out of our control

Economic Fuel - best estimate of the cash cost of fuel, net of the impact of our fuel-hedging program

Aircraft Utilization - block hours per day; this represents the average number of hours our aircraft are flying

Aircraft Stage Length - represents the average miles flown per aircraft departure

Diluted Earnings per Share - represents earnings per share using fully diluted shares outstanding

Diluted Shares - represents the total number of shares that would be outstanding if all possible sources of conversion, such as stock options, were exercised

Productivity - number of revenue passengers per full-time equivalent employee

Debt to Capitalization ratio - represents adjusted debt (long-term debt plus seven times annualized aircraft rent) divided by total equity plus adjusted debt

 

SOURCE Alaska Air Group

Media contact: Bobbie Egan, Media Relations Manager, (206) 392-5134; or Investor/analyst contact: Chris Berry, Managing Director of Investor Relations, (206) 392-5260