Alaska Air Group Reports Fourth Quarter Results
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Alaska Air Group, Inc. today reported a fourth quarter net loss of $44.9 million, or $1.66 per diluted share, compared to a net loss of $16.1 million, or $0.60 per diluted share, in the fourth...
Alaska Air Group, Inc.
Fourth quarter results in 2004 include a restructuring charge of $25.9 million ($16.0 million, net of tax, or $0.59 per share) and additional impairment charges of $0.6 million ($0.4 million, net of tax, or $0.01 per share) related to Horizon’s retired F-28 fleet. This quarter’s results also include $23.1 million ($14.2 million, net of tax, or $0.53 per share) in mark-to-market hedging losses reflecting a decrease in the fair value of the company’s fuel hedge portfolio during the quarter. Without these items, the net loss would have been $14.3 million, or $0.53 per diluted share during the fourth quarter of 2004. Excluding the full-year impact of the items discussed above, as well as the B737-200 impairment charge and the navigation fee recovery recorded earlier in the year, and government compensation recorded in 2003, the 2004 full year net income would have been $5.2 million, or $0.19 per diluted share, compared to a net loss of $30.8 million, or $1.15 per diluted share, in 2003.
"The improvement in our operating results for the year shows that we are continuing to make headway with our restructuring. Our move in early 2004 to simplify fares, coupled with our employees’ ongoing focus on the customer experience, contributed to a jump in our passenger traffic and loads," said Bill Ayer, Alaska Air Group’s chairman and chief executive officer. "However, we would have clearly been in the red in 2004, after adjusting for the unusual items, if not for fuel hedging gains.
"As we head into 2005, we must continue to pursue cost savings initiatives that will help us become consistently profitable, and weather the onslaught of low-cost competition, restructured network airlines and very high fuel prices," Ayer said.
Alaska Airlines’ passenger traffic in the fourth quarter increased 10.2 percent on a capacity increase of 5.0 percent. Alaska’s load factor increased 3.4 percentage points to 72.9 percent compared to the same period in 2003. Alaska’s operating revenue per available seat mile (ASM) increased 0.4 percent, while its operating cost per ASM excluding fuel and restructuring charges decreased 8.6 percent. Alaska’s pretax loss for the quarter was $68.9 million, compared to a pretax loss of $27.3 million in 2003. Excluding the unusual items referenced above, Alaska’s pretax loss was $22.7 million for the quarter.
Horizon Air’s passenger traffic in the fourth quarter increased 36.8 percent on a 28.1 percent capacity increase. Horizon’s load factor increased by 4.4 percentage points to 71.7 percent compared to the same period in 2003. Horizon’s operating revenue per ASM decreased 17.2 percent, while its operating cost per ASM excluding fuel and the impairment charge decreased 18.1 percent. The decrease in Horizon’s revenue per ASM and cost per ASM excluding fuel is largely due to the addition of Horizon’s contract flying for Frontier Airlines. This flying represented 23.1 percent of Horizon’s capacity during the fourth quarter and 9.9 percent of its passenger revenues. Horizon’s pretax loss for the quarter was $1.6 million, compared to a pretax income of $5.4 million in 2003. Excluding the unusual items referenced above, Horizon’s pretax income was $1.8 million for the quarter.
Alaska Air Group had cash and short-term investments at Dec. 31, 2004, of approximately $874 million compared to $812 million at Dec. 31, 2003. The company’s debt-to-capital ratio, assuming aircraft operating leases are capitalized at seven times annualized rent, was 78 percent as of Dec. 31, 2004, compared to 77 percent as of Dec. 31, 2003.
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 following this release.
A conference call regarding the fourth quarter 2004 results will be simulcast via the Internet at 8:30 a.m. Pacific Time. It may be accessed through the company’s website at www.alaskaair.com. For those unable to listen to the live broadcast, a replay will be available after the conclusion of the call at www.alaskaair.com.
This report may contain forward-looking statements that 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. These statements relate to future events or our future financial performance and involve known and unknown risks and uncertainties that may cause our actual results or performance to be materially different from those indicated by any forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "forecast," "may," "will," "could," "should," "expect," "plan," "believe," "potential" or other similar words indicating future events or contingencies. Some of the things that could cause our actual results to differ from our expectations are: changes in our operating costs including fuel; the competitive environment and other trends in our industry; economic conditions; our reliance on automated systems; actual or threatened terrorist attacks, global instability and potential U.S. military actions or activities; our ability to meet our cost reduction goals; the outcome of the arbitration with the Air Line Pilots Association; labor disputes; changes in laws and regulations; liability and other claims asserted against us; failure to expand our business; interest rates and the availability of financing; our ability to attract and retain qualified personnel; changes in our business plans; our significant indebtedness; downgrades of our credit ratings; and inflation. For a discussion of these and other risk factors, see Item 1 of the Company’s Amendment No. 1 to its Annual Report for the year ended Dec. 31, 2003, on Form 10-K/A. All of the forward-looking statements are qualified in their entirety by reference to the risk factors discussed therein. These risk factors may not be exhaustive. 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 disclaim any obligation to publicly update or revise any forward-looking statements after the date of this report to conform them to actual results.
ALASKA AIR GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(In Millions Except Per Share Amounts)
Three Months Twelve Months
Ended December 31 Ended December 31
2004 2003 2004 2003
Operating Revenues:
Passenger $597.9 $564.8 $2,494.6 $2,243.0
Freight and mail 22.0 18.7 90.3 82.3
Other -- net 36.4 29.8 138.9 119.5
Total Operating Revenues 656.3 613.3 2,723.8 2,444.8
Operating Expenses:
Wages and benefits 229.2 240.4 965.9 937.9
Employee profit sharing 1.2 3.7 1.6 3.7
Contracted services 29.3 25.6 108.4 100.1
Aircraft fuel 155.9 92.8 540.7 363.3
Aircraft maintenance 46.2 43.6 184.1 183.8
Aircraft rent 45.9 48.8 187.4 194.9
Food and beverage service 12.4 14.4 51.9 61.0
Other selling expenses
and commissions 33.4 34.1 144.9 133.2
Depreciation and amortization 36.8 34.8 142.6 133.0
Loss on sale of assets 2.4 2.0 1.0 2.2
Landing fees and other rentals 46.6 44.3 185.1 164.9
Other 48.0 45.0 196.4 184.3
Restructuring charges 25.9 -- 53.4 --
Impairment of aircraft
and spare engines 0.6 -- 40.2 --
Total Operating Expenses 713.8 629.5 2,803.6 2,462.3
Operating Loss (57.5) (16.2) (79.8) (17.5)
Nonoperating Income (Expense):
Interest income 5.9 4.5 24.5 12.8
Interest expense (13.0) (12.4) (51.9) (47.8)
Interest capitalized 0.6 0.4 1.7 2.3
U.S. government compensation -- -- -- 71.4
Other -- net (8.9) (0.4) 84.9 7.8
(15.4) (7.9) 59.2 46.5
Income (loss) before income tax (72.9) (24.1) (20.6) 29.0
Income tax expense (benefit) (28.0) (8.0) (5.3) 15.5
Net Income (Loss) ($44.9) ($16.1) ($15.3) $13.5
Basic Earnings (Loss)
Per Share $(1.66) $(0.60) $(0.57) $0.51
Diluted Earnings (Loss)
Per Share $(1.66) $(0.60) $(0.57) $0.51
Shares used for computation:
Basic 26.975 26.728 26.859 26.648
Diluted 26.975 26.728 26.859 26.730
Alaska Air Group, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
December 31, December 31,
(In Millions) 2004 2003
Cash and marketable securities $874 $812
Total current assets $1,242 $1,148
Property and equipment-net 1,908 1,949
Other assets 185 162
Total assets $3,335 $3,259
Current liabilities $957 $1,017
Long-term debt and capital lease obligations 990 907
Other liabilities and credits 723 661
Shareholders' equity 665 674
Total liabilities and shareholders' equity $3,335 $3,259
AlaskaAirlines Financial and Statistical Data
Quarter Ended Year Ended
December 31 December 31
Financial Data % %
(in millions): 2004 2003 Change 2004 2003 Change
Operating Revenues:
Passenger $477.8 $460.3 3.8 $2,023.6 $1,840.4 10.0
Freight and mail 21.1 17.5 20.6 86.4 77.3 11.8
Other -- net 32.4 26.7 21.3 123.0 109.7 12.1
Total Operating
Revenues 531.3 504.5 5.3 2,233.0 2,027.4 10.1
Operating Expenses:
Wages and benefits 187.0 199.9 (6.5) 798.5 778.6 2.6
Employee profit
sharing 0.9 2.9 NM 1.2 2.9 NM
Contracted services 26.2 20.7 26.6 96.5 81.6 18.3
Aircraft fuel 135.6 79.9 69.7 472.0 312.1 51.2
Aircraft maintenance 34.5 35.7 (3.4) 145.8 153.4 (5.0)
Aircraft rent 28.0 31.1 (10.0) 113.5 123.9 (8.4)
Food and beverage
service 11.9 13.9 (14.4) 49.8 58.7 (15.2)
Other selling expenses
and commissions 31.1 39.0 (20.3) 132.2 148.0 (10.7)
Depreciation and
amortization 32.9 31.7 3.8 128.1 119.5 7.2
Loss on sale of assets 2.6 2.1 NM 2.0 3.4 NM
Landing fees and
other rentals 35.9 34.3 4.7 142.0 127.8 11.1
Other 35.6 34.0 4.7 146.6 136.9 7.1
Restructuring charges 25.9 -- 100.0 53.4 -- 100.0
Impairment of aircraft -- -- -- 36.8 -- 100.0
Total Operating
Expenses 588.1 525.2 12.0 2,318.4 2,046.8 13.3
Operating Loss (56.8) (20.7) NM (85.4) (19.4) NM
Interest income 6.2 4.9 26.2 15.2
Interest expense (11.0) (11.3) (44.1) (45.2)
Interest capitalized 0.4 0.2 1.1 1.5
U.S. government
compensation -- -- -- 52.8
Other -- net (7.7) (0.4) 75.2 6.9
(12.1) (6.6) 58.4 31.2
Income (Loss) Before
Income Tax $(68.9) $(27.3) NM $(27.0) $11.8 NM
Operating Statistics:
Revenue passengers (000) 3,998 3,712 7.7 16,295 15,047 8.3
RPMs (000,000) 3,976 3,608 10.2 16,231 14,554 11.5
ASMs (000,000) 5,452 5,194 5.0 22,276 20,804 7.1
Passenger load
factor 72.9% 69.5% 3.4pts 72.9% 70.0% 2.9pts
Yield per passenger
mile (in cents) 12.02 12.76 (5.8) 12.47 12.65 (1.4)
Operating revenue
per ASM (in cents) 9.75 9.71 0.4 10.02 9.74 2.9
Operating expenses
per ASM (in cents) (a) 10.79 10.11 6.7 10.41 9.84 5.8
Operating expense per
ASM excluding fuel,
navigation fee recovery,
restructuring and
impairment charges
(in cents) (a) 7.83 8.57 (8.6) 7.92 8.34 (5.0)
Raw fuel cost
per gallon
(in cents) (a) 159.9 102.4 56.2 137.2 98.3 39.6
GAAP fuel cost
per gallon
(in cents) (a) 155.7 95.8 62.5 133.1 92.5 43.9
Economic fuel cost
per gallon
(in cents) (a) 140.2 94.8 47.9 125.9 90.9 38.5
Fuel gallons (000,000) 7.1 83.4 4.4 354.7 337.3 5.2
Average number
of employees 9,433 9,921 (4.9) 9,968 10,040 (0.7)
Aircraft utilization
(blk hrs/day) 10.8 10.3 4.9 11.0 10.5 4.8
Operating fleet at
period-end 108 109 (0.9) 108 109 (0.9)
NM = Not Meaningful
(a) See Note A following.
Horizon Air Financial and Statistical Data
Quarter Ended December 31 Year Ended December 31
Financial Data % %
(in millions): 2004 2003 Change 2004 2003 Change
Operating Revenues:
Passenger $124.4 $115.5 7.7 $484.8 $442.3 9.6
Freight and mail 0.9 1.2 (25.0) 3.9 5.0 (22.0)
Other -- net 3.6 4.8 (25.0) 14.5 16.5 (12.1)
Total Operating
Revenues 128.9 121.5 6.1 503.2 463.8 8.5
Operating Expenses:
Wages and benefits 41.1 40.5 1.5 163.1 159.3 2.4
Employee profit
sharing 0.3 0.8 NM 0.4 0.8 NM
Contracted services 5.3 6.6 (19.7) 20.7 25.0 (17.2)
Aircraft fuel 20.3 12.9 57.4 68.7 51.2 34.2
Aircraft maintenance 11.7 7.9 48.1 38.3 30.4 26.0
Aircraft rent 17.9 17.7 1.1 73.9 71.0 4.1
Food and beverage
service 0.5 0.5 0.0 2.1 2.3 (8.7)
Other selling expenses
and commissions 6.6 6.1 8.2 26.5 24.9 6.4
Depreciation and
amortization 3.7 2.8 32.1 13.4 12.3 8.9
Gain on sale of assets (0.2) (0.1) NM (1.0) (1.2) NM
Landing fees and
other rentals 10.2 10.3 (1.0) 41.4 38.5 7.5
Other 11.0 10.0 10.0 43.0 42.6 0.9
Impairment of aircraft
and spare engines 0.6 -- 100.0 3.4 -- 100.0
Total Operating
Expenses 129.0 116.0 11.2 493.9 457.1 8.1
Operating Income (Loss) (0.1) 5.5 NM 9.3 6.7 NM
Interest income 0.2 0.2 1.1 0.7
Interest expense (0.7) (0.5) (3.9) (2.4)
Interest capitalized 0.2 0.2 0.6 0.8
U.S. government
compensation -- -- -- 18.6
Other -- net (1.2) -- 10.0 0.9
(1.5) (0.1) 7.8 18.6
Income (Loss) Before
Income Tax $(1.6) $5.4 NM $17.1 $25.3 NM
Operating Statistics:
Revenue passengers (000) 1,568 1,263 24.1 5,930 4,934 20.2
RPMs (000,000) 569 416 36.8 2,155 1,640 31.4
ASMs (000,000) 793 619 28.1 3,107 2,569 20.9
Passenger load factor 71.7% 67.3% 4.4pts 69.3% 63.9% 5.4pts
Yield per passenger
mile (in cents) 21.85 27.72 (21.2) 22.50 26.96 (16.5)
Operating revenue
per ASM (in cents) 16.25 19.62 (17.2) 16.20 18.06 (10.3)
Operating expenses
per ASM (in cents) (a) 16.26 18.74 (13.2) 15.90 17.76 (10.5)
Operating expense
per ASM excluding
fuel and impairment
charges (in cents) (a) 13.62 16.64 (18.1) 13.58 15.80 (14.1)
Raw fuel cost
per gallon
(in cents) (a) 166.4 106.1 56.8 142.3 101.9 39.6
GAAP fuel cost
per gallon
(in cents) (a) 162.4 98.5 64.9 138.2 95.3 45.0
Economic fuel cost
per gallon
(in cents) (a) 147.9 98.2 50.6 131.3 93.4 40.6
Fuel gallons (000,000) 12.5 13.1 (4.6) 49.7 53.7 (7.4)
Average number
of employees 3,493 3,320 5.2 3,423 3,359 1.9
Aircraft utilization
(blk hrs/day) 8.5 7.5 13.3 8.3 7.8 6.4
Operating fleet at
period-end 65 62 4.8 65 62 4.8
NM = Not Meaningful
(a) See Note A following.
Note A:
Pursuant to Item 10 of Regulation S-K, 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. The non-GAAP financial measures provide management the ability to measure and monitor performance both with and without the cost of aircraft fuel (including the gains and losses associated with our fuel hedging program where appropriate), restructuring charges, aircraft impairment charges, government compensation in 2003 and a large recovery in 2004 of disputed navigation fees paid in prior years (of which $7.7 million was recorded in operating expenses and $3.3 million was recorded in non-operating income). Because the cost and availability of aircraft fuel are subject to many economic and political factors beyond our control and we record changes in the fair value of our hedge portfolio in our income statement, it is our view that the measurement and monitoring of performance without fuel is important. In addition, we believe the disclosure of financial performance without impairment and restructuring charges, government compensation and the navigation fee recovery in 2004 is useful to investors. Finally, these non-GAAP financial measures are also more comparable to financial measures reported to the Department of Transportation by other major network airlines.
The following tables reconcile our non-GAAP financial measures to the most directly comparable GAAP financial measures for both Alaska Airlines, Inc. and Horizon Air Industries, Inc.:
Alaska Airlines, Inc.:
($ in millions)
Three Months Ended Twelve Months Ended
December 31, December 31,
Unit cost reconciliations: 2004 2003 2004 2003
Operating expenses $588.1 $525.2 $2,318.4 $2,046.8
ASMs (000,000) 5,452 5,194 22,276 20,804
Operating expenses
per ASM (in cents) 10.79 10.11 10.41 9.84
Operating expenses $588.1 $525.2 $2,318.4 $2,046.8
Less: aircraft fuel (135.6) (79.9) (472.0) (312.1)
Less: impairment of aircraft -- -- (36.8) --
Less: restructuring charges (25.9) -- (53.4) --
Add: navigation fee settlement -- -- 7.7 --
Operating expense excluding
fuel, navigation fee settlement,
impairment and
restructuring charges $426.6 $445.3 $1,763.9 $1,734.7
ASMs (000,000) 5,452 5,194 22,276 20,804
Operating expense per
ASM excluding fuel,
navigation fee settlement,
impairment and
restructuring charges
(in cents) 7.83 8.57 7.92 8.34
Aircraft fuel reconciliations:
Fuel expense before
hedge activities
("raw fuel") $139.3 $85.4 $486.6 $331.7
Fuel gallons (000,000) 87.1 83.4 354.7 337.3
Raw fuel cost per gallon
(in cents) 159.9 102.4 137.2 98.3
Fuel expense before
hedge activities
("raw fuel") $139.3 $85.4 $486.6 $331.7
Less: gains on settled
hedges included
in fuel expense (3.7) (5.5) (14.6) (19.6)
GAAP fuel expense $135.6 $79.9 $472.0 $312.1
Fuel gallons (000,000) 87.1 83.4 354.7 337.3
GAAP fuel cost per gallon
(in cents) 155.7 95.8 133.1 92.5
GAAP fuel expense $135.6 $79.9 $472.0 $312.1
Less: gains on settled
hedges included in
nonoperating income (expense) (13.5) (0.8) (25.2) (5.4)
Adjusted fuel 122.1 79.1 446.8 306.7
Fuel gallons (000,000) 87.1 83.4 354.7 337.3
Economic fuel cost per gallon
(in cents) 140.2 94.8 125.9 90.9
Mark-to-market gains (losses)
included in non-operating
income related to hedges
that settle in future periods ($20.3) -- $50.1 --
Reconciliation to GAAP pretax income (loss):
Pretax income (loss) excluding
impairment and restructuring
charges, navigation fee settlement,
government compensation and
mark-to-market hedging gains ($22.7) ($27.3) $2.1 ($41.0)
Less: impairment of aircraft -- (36.8) --
Less: restructuring charges (25.9) -- (53.4) --
Add: government compensation -- -- 52.8
Add: mark-to-market hedging
gains (losses) included in
nonoperating income (expense) (20.3) -- 50.1 --
Add: navigation fee settlement -- -- 11.0 --
Pretax income (loss)
reported GAAP amounts ($68.9) ($27.3) ($27.0) $11.8
Horizon Air Industries, Inc.
($ in millions)
Three Months Ended Twelve Months Ended
December 31, December 31,
Unit cost reconciliations: 2004 2003 2004 2003
Operating expenses $129.0 $116.0 $493.9 $457.1
ASMs (000,000) 793 619 3,107 2,569
Operating expenses per ASM
(in cents) 16.26 18.74 15.90 17.76
Operating expenses $129.0 $116.0 $493.9 $457.1
Less: aircraft fuel (20.3) (12.9) (68.7) (51.2)
Less: impairment of aircraft (0.6) -- (3.4) --
Operating expense excluding
fuel and impairment charge $108.1 $103.1 $421.8 $405.9
ASMs (000,000) 793 619 3,107 2,569
Operating expense per ASM
excluding fuel and
impairment charge (in cents) 13.62 16.64 13.58 15.80
Aircraft fuel reconciliations:
Fuel expense before hedge
activities ("raw fuel") $20.8 $13.9 $70.7 $54.7
Fuel gallons (000,000) 12.5 13.1 49.7 53.7
Raw fuel cost per gallon
(in cents) 166.4 106.1 142.3 101.9
Fuel expense before hedge
activities ("raw fuel") $20.8 $13.9 $70.7 $54.7
Less: gains on settled hedges
included in fuel expense (0.5) (1.0) (2.0) (3.5)
GAAP fuel expense $20.3 $12.9 $68.7 $51.2
Fuel gallons (000,000) 12.5 13.1 49.7 53.7
GAAP fuel cost per gallon
(in cents) 162.4 98.5 138.2 95.3
GAAP fuel expense $20.3 $12.9 $68.7 $51.2
Less: gains on settled hedges
included in nonoperating
income (expense) (1.8) (0.1) (3.4) (1.0)
Adjusted fuel 18.5 12.8 65.3 50.2
Fuel gallons (000,000) 12.5 13.1 49.7 53.7
Economic fuel cost per gallon
(in cents) 147.9 98.2 131.3 93.4
Mark-to-market gains (losses)
included in non-operating
income related to hedges
that settle in future periods ($2.8) -- $6.8 --
Reconciliation to GAAP pretax income (loss):
Pretax income (loss) excluding
impairment charge, government
compensation and mark-to-market
hedging gains $1.8 $5.4 $13.7 $6.7
Less: impairment of aircraft
and related spare parts (0.6) -- (3.4) --
Add: government compensation -- -- -- 18.6
Add: mark-to-market hedging
gains included in nonoperating
income (expense) (2.8) -- 6.8 --
Pretax income (loss) reported
GAAP amounts ($1.6) $5.4 $17.1 $25.3
Air Group Net Income (Loss) and EPS Reconciliation:
The following table summarizes Alaska Air Group, Inc.’s net income and diluted earnings per share during 2003 and 2004 excluding restructuring and impairment charges, navigation fee recovery, the second, third and fourth quarter of 2004 hedging mark-to-market gains (losses) and government compensation as reported in accordance with GAAP (in millions except per share amounts):
Three Months Ended December 31,
2004 2003
Dollars Diluted EPS Dollars Diluted EPS
Net loss and diluted EPS
excluding mark-to-market
hedging losses, restructuring charges
and impairment charges ($14.3) (0.53) ($16.1) ($0.60)
Mark-to-market hedging losses,
net of tax (14.2) (0.53) -- --
Restructuring charges,
net of tax (16.0) (0.59) -- --
Impairment charges,
net of tax (0.4) (0.01) -- --
Reported GAAP amounts ($44.9) ($1.66) ($16.1) ($0.60)
Twelve Months Ended December 31,
2004 2003
Dollars Diluted EPS Dollars Diluted EPS
Net income (loss) and diluted
EPS excluding mark-to-market
hedging gains, navigation fee
settlement, restructuring
charges, government compensation
and impairment charge $5.2 0.19 ($30.8) ($1.15)
Government compensation,
net of tax -- -- 44.3 1.66
Navigation fee recovery 6.3 0.23 -- --
Mark-to-market hedging gains,
net of tax 31.7 1.18 -- --
Restructuring charges,
net of tax (31.8) (1.18) -- --
Impairment charges,
net of tax (26.7) (0.99) -- --
Reported GAAP amounts ($15.3) (0.57) $13.5 $0.51
Forecasted Financial Measures During our quarterly earnings conference call, we expect to discuss forward- looking forecasted unit cost information for 2005. This forecasted unit cost information includes non-GAAP unit cost estimates which are summarized in the following table together with the most directly comparable GAAP unit cost for both Alaska Airlines, Inc. and Horizon Air Industries, Inc.:
Alaska Airlines
Forecast of cost Forecast of fuel Forecast of total
per available seat cost per available operating cost per
mile, excluding seat mile available seat
fuel (cents) (see Note 1) mile, as reported
on a GAAP basis
(cents)
First quarter 2005 8.2 to 8.3 1.9 10.1 to 10.2
Second quarter 2005
Third quarter 2005
Fourth quarter 2005
Total 2005
Horizon Air
Forecast of cost Forecast of fuel cost Forecast of total
per available seat per available seat operating cost per
mile, excluding mile (See Note 1) available seat mile,
fuel (cents) as reported on a
GAAP basis (cents)
First quarter 2005 14.7 2.2 16.9
Second quarter 2005 13.2 2.1 15.3
Third quarter 2005 12.0 2.1 14.1
Fourth quarter 2005 12.8 2.3 15.1
Total 2005 13.1 2.2 15.3
Note 1: Our forecast of fuel costs is based on anticipated gallons consumed and estimated fuel cost per gallon for both Alaska and Horizon. The estimate also excludes the benefit from settled hedges recorded in other non-operating income as it does not impact our operating cost per available seat mile as presented on a GAAP basis. Given the volatility of fuel prices, readers should be cautioned that actual fuel expense will likely differ from the forecast above.
SOURCE: Alaska Air Group, Inc.
CONTACT: Brad Tilden, +1-206-392-5362, or Caroline Boren,
+1-206-392-5799, both of Alaska Air Group
Web site: http://www.alaskaair.com/
