Alaska Air Group Inc., the parent of Alaska Airlines and Horizon Air, reported a first-quarter loss Thursday, blaming one-time charges including a drop in the value of its aging fleet of MD-80s and the company's decision to move to an all-Boeing 737 fleet.
For the three months ended March 31, Alaska Air Group reported a net loss of $79.1 million, or $2.36 per share, versus a loss of $80.5 million, or $2.39 per diluted share, a year ago.
Operating revenue increased 14 percent to $735.4 million for the latest quarter, up from $642.5 million a year ago.
Last month, Alaska Airlines said it was investing $750 million to retire its MD-80s early, replacing them with 737s by the end of 2008. As a result of that decision, the company had to estimate the market value of the MD-80 fleet, recording a non-cash impairment charge of $131.1 million.
Excluding those charges, Alaska Air said it would have posted earnings of $2.8 million, or 8 cents per share. That soundly beat the consensus forecast of analysts polled by Thomson Financial for a loss of 56 cents a share.
Shares of Alaska Air Group rose $1.59, or 4.5 percent, to $36.99 in afternoon trading on the New York Stock Exchange. The stock has traded in a 52-week range of $25.55 to $37.86.
The increase in operating revenue was driven mostly by passenger revenue, which jumped to $679.5 million compared with $587 million a year ago. Both airlines reported a rise in passenger traffic: 5.2 percent for Alaska and 14. 8 percent for Horizon.
Fuel costs soared to $163.1 million, up from $38.5 million a year ago. Those costs included gains and losses from hedging, a tactic used to lower costs by locking in fuel costs ahead of time.
Despite the net loss, Alaska Air Group's chairman and chief executive, Bill Ayer, said the company "was very pleased to report an adjusted net profit for what is seasonally our weakest quarter."
Ayer said the last time the company reported an adjusted first-quarter profit was in 1999.
Alaska Airlines, the nation's ninth-largest carrier, has worked aggressively to cut costs in the last year to better compete with discount airlines like Southwest Airlines Inc. and JetBlue Airways Corp.
In 2004, it closed its Oakland maintenance facility, laying off about 750 employees. It also cut about 200 management positions. Last year, it laid off nearly 500 baggage handlers in Seattle and contracted those jobs out to Menzies Aviation. Pilots also agreed to a pay cut.
"Our goal has been to reposition ourselves to compete successfully in this rapidly changing industry, and in doing so, improve the position of our stakeholders. These results indicate that we're moving down this path," Ayer said.
On the Net:
Alaska Air Group: http://www.alaskaair.com/
News stories provided by third parties are not edited by "Site Publication" staff. For suggestions and comments, please click the Contact link at the bottom of this page.