26-Jan-2011 11:43 AM

Alaska Air Group Reports Record Fourth Quarter And Full-Year Results; Announces Order For 15 Boeing

Direct News Source

Highlights:

Record fourth-quarter net income excluding special items of $47.4 million, or $1.28 per diluted share, compared to $4.4 million, or $0.12 per diluted share, in the fourth quarter of 2009. This quarter's results compared to a First Call mean estimate of $1.02 per share.
Record full-year net income excluding special items of $262.6 million, or $7.14 per diluted share, compared to $88.7 million, or $2.45 per diluted share in 2009.
Net income for the fourth quarter under Generally Accepted Accounting Principles (GAAP) of $64.8 million, or $1.75 per diluted share, compared to net income of $24.1 million, or $0.67 per diluted share, in 2009. Full year GAAP net income of $251.1, or $6.83 per diluted share, compared to net income of $121.6 million, or $3.36 per diluted share, in 2009.
Alaska Airlines orders 15 new Boeing 737 aircraft, including 13 B737-900ER (extended range) aircraft, for delivery in 2012 through 2014.
Alaska Airlines holds the No. 1 spot in U.S. Department of Transportation on-time performance among the 10 largest U.S. airlines for the last twelve months.
Air Group employees earn record incentive pay of $92 million.
Alaska Airlines contributes $100 million to its defined-benefit pension plans in December 2010, bringing the full-year total contribution to nearly $150 million for the second year in a row.
Alaska Airlines reaches a tentative agreement with its IAM-represented employees - including customer service agents, reservations agents, and certain clerical staff.
Horizon Air's mechanics and pilots ratify long-term labor contracts.
Air Group announces change in Horizon aircraft livery to retire Horizon external brand, and replace it with the Alaska brand including the recognizable Eskimo on the tail. Examples of the new livery can be found today at alaskaair.com/newsroom.
Horizon Air announces final transition to all-Q400 fleet in 2011.
Air Group had $1.2 billion in unrestricted cash and marketable securities at December 31, 2010. Adjusted debt-to-total capital ratio of 67% -- lowest leverage since 1999.
Over the last twelve months, Alaska earned recognition for the following:
- In January 2011, awarded On-Time Performance Service Award among major North American Airlines by FlightStats.com.
- In January 2011, named winner of the 2011 Airline Technology Leadership Award by Air Transport World.
- Ranked "Highest in Customer Satisfaction Among Traditional Network Carriers" in 2010 by J.D. Power and Associates for the third year in a row.
- In 2010, named the Top Performing Airline by Aviation Week.
- Recognized in 2010 for having the "Best Loyalty Credit Card" in North America at the Frequent Traveler Awards.

SEATTLE - Alaska Air Group, Inc. (NYSE: ALK) today reported record fourth quarter 2010 net income of $64.8 million, or $1.75 per diluted share, compared to net income of $24.1 million, or $0.67 per diluted share, in the fourth quarter of 2009. Excluding mark-to-market fuel hedge gains of $28.1 million ($17.4 million after tax or $0.47 per diluted share), the company reported record net income of $47.4 million, or $1.28 per diluted share, compared to net income of $4.4 million, or $0.12 per share, excluding special items in the fourth quarter of 2009.

The company reported full-year 2010 record net income of $251.1 million, compared to $121.6 million in 2009. Excluding the impact of the items noted in the table below, the company reported record net income of $262.6 million, or $7.14 per diluted share for 2010, a $173.9 million improvement from the $88.7 million, or $2.45 per diluted share, in 2009. This marks the company's seventh consecutive year of adjusted profits.

"We are very pleased to report record fourth-quarter and full-year profits. These results were driven by strong revenue growth, excellent cost management, an on-time operation, and promising new markets, " said Chairman and CEO Bill Ayer. "2010 was a record year in nearly every regard and reflects the efforts of the past decade as much as the last twelve months. At the heart of our results are 12,000 dedicated Alaska and Horizon employees. I want to thank them for being open to new ideas and working together to deliver outstanding customer service and operational performance. And though it's been difficult at times, because of our collective perseverance and the structural changes we've made, our future is as bright as it's ever been."

The following tables reconcile the company's adjusted net income and earnings per diluted share (EPS) during the fourth quarters and full years of 2010 and 2009 to amounts as reported in accordance with GAAP (in millions except per-share amounts):

		Three months ended Dec. 31,
		2010				2009
		Dollars		Diluted EPS		Dollars	Diluted EPS
Net income and diluted EPS, excluding the item noted below:		$47.4		$1.28		$4.4	$0.12
Adjustments to reflect the timing of gain or loss recognition resulting from mark-to-market fuel-hedge accounting, net of tax		17.4		0.47		19.7	0.55
Reported GAAP amounts		$64.8		$1.75		$24.1	$0.67

		Twelve months ended Dec. 31,
		2010				2009
		Dollars		Diluted EPS		Dollars	Diluted EPS
Net income and diluted EPS, excluding the items noted below:		$262.6		$7.14		$88.7	$2.45
New pilot contract transition costs, net of tax		---		---		(22.3)	(0.62)
Horizon restructuring charges and CRJ-700 fleet transition costs, net of tax		(8.2)		(0.22)		---	---
Adjustments to reflect the timing of gain or loss recognition resulting from mark-to-market fuel-hedge accounting, net of tax		(3.3)		(0.09)		55.2	1.53
Reported GAAP amounts		$251.1		$6.83		$121.6	$3.36
Today Alaska Airlines is also announcing an order for 15 new Boeing 737 aircraft to be delivered in 2012 through 2014, including 13 new B737-900ER (extended range) aircraft, which will be new to the Alaska fleet. "The 737-900ER will be a great addition to our next generation Boeing 737 fleet. It will improve our already best-in-class rating for fuel-efficiency," said Alaska Airlines President Brad Tilden. "Depending on the ultimate configuration, the larger 737-900ER will have between 21 and 27 seats more than our existing B737-800 aircraft and will be a perfect fit for our longer-haul and high traffic West Coast markets." The following table outlines Alaska Airlines' current delivery schedule giving consideration to this order announcement:
	2011	2012	2013	2014	Total
Previously Committed:
Boeing 737-800	3	4	2	2	11
Announced Today:
Boeing 737-800	-	2	1	(1)	2
Boeing 737-900ER	-	-	6	7	13
New Order Sub-Total	-	2	7	6	15
Total Commitment	3	6	9	8	26
Planned Retirements	-	(3)	-	(5)	(8)
Current Growth Plan	3	3	9	3	18
Options	-	-	3	2	5
Potential Fleet Growth Plan	3	3	9-12	3-5	18 - 23

Current Growth Plan (firm only)
ASMs:	8% - 9%	3%	6%	6%
Block Hours:	8%	3%	4.5%	3.5%
Because the company exceeded its financial and operational goals for the year, more than 12,000 Air Group employees have earned $92 million of incentive pay - the most it has ever paid. Virtually every employee will receive a performance-based bonus in excess of one month's pay, on top of $1,050 to $1,200 per employee for meeting on-time and customer satisfaction goals during the year. In addition, Alaska Airlines made a voluntary supplemental contribution of $100 million to its defined-benefit pension plans, bringing the full-year total to almost $150 million and the two-year total to nearly $300 million, resulting in a funded status of 85% as of December 31, 2010. "Our generous incentive payout, combined with our commitment to fund our pension obligations, is consistent with our vision of sharing our success broadly with our employees," Ayer said.