Alaska Air Group Reports First Quarter Results

Alaska Airlines, Horizon Air announce new service charge for first checked bag with guarantee

First Quarter Financial Highlights:

- Net loss, excluding special items, of $25.4 million, or $0.70 per share, compared to a net loss of $37.7 million, or $1.02 per share, in the first quarter of 2008. This compares to a First Call mean estimate of a $0.49 per-share loss.

- A net loss under Generally Accepted Accounting Principles (GAAP) of $19.2 million, or $0.53 per share, compared to a net loss of $37.3 million, or $1.01 per share, in 2008.

- $1.04 billion in unrestricted cash and marketable securities as of March 31, 2009 .

SEATTLE , April 23 /PRNewswire-FirstCall/ -- Alaska Air Group, Inc. (NYSE: ALK) today reported a first quarter 2009 net loss of $19.2 million, compared to a net loss of $37.3 million in the first quarter of 2008. Excluding mark-to-market fuel hedge gains of $10 million ($6.2 million after tax, or $0.17 per share), the company reported a net loss of $25.4 million, or $0.70 per share, compared to a net loss of $37.7 million, or $1.02 per share, in first quarter 2008.

The following table summarizes the company's net loss and amounts per share during the first quarter of 2009 and 2008 excluding adjustments to reflect the timing of gain or loss recognition resulting from mark-to-market fuel-hedge accounting as reported in accordance with GAAP (in millions except per-share amounts):

"While our first quarter financial results improved over last year due to a significant decline in fuel cost, we're disappointed to report a loss for the quarter. To minimize the impact of the steep decline in air travel demand, we have reduced our schedules, reallocated capacity and taken fare actions," said Bill Ayer , Alaska Air Group's chairman and chief executive officer. "We are responding to the continued economic uncertainty by maintaining a healthy level of liquidity, retiming some capital expenditures, controlling costs, reducing capacity and actively pursuing revenue opportunities."

Alaska Airlines' mainline passenger traffic in the first quarter declined 7.7 percent on a 9.3 percent capacity decrease, compared to the first quarter of 2008. Load factor increased 1.3 percentage points to 75.7 percent. Alaska's mainline passenger revenue per available seat mile (ASM) decreased 2.0 percent and its operating cost per ASM, excluding fuel and the mark-to-market fuel hedge gains, increased 11.3 percent. Alaska's total pretax loss for the quarter was $18.3 million, compared to a pretax loss of $39.8 million in the first quarter of 2008. Excluding mark-to-market fuel hedge gains, Alaska's pretax loss was $26.6 million for the quarter, compared to a pretax loss of $39.6 million in the same period of 2008.

Horizon Air's passenger traffic in the first quarter declined 20.4 percent on a 16.5 percent capacity decrease, compared to the first quarter of 2008. Load factor declined by 3.3 percentage points to 66.6 percent. Horizon's passenger revenue per ASM decreased 0.7 percent and its operating cost per ASM, excluding fuel and mark-to-market fuel hedge gains, increased 5.8 percent. Horizon's total pretax loss for the quarter was $10.5 million, compared to a pretax loss of $17.6 million in the first quarter of 2008. Excluding mark-to-market fuel hedge gains, Horizon's pretax loss was $12.2 million for the quarter, compared to a pretax loss of $18.5 million in the first quarter of 2008.

A summary of financial and statistical data for Alaska Airlines and Horizon Air, 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 at the end of this release.

First checked bag service charge and guarantee

Alaska Airlines and Horizon Air also announced they will join nearly all major domestic carriers in charging for a first checked bag. The $15 service charge -- effective July 7 for tickets purchased beginning May 1 -- includes a guarantee to compensate passengers if their luggage is not at baggage claim 25 minutes after their flight parks at the gate.