Alaska Air Group Report

Alaska Airlines

Financial Highlights:

  • Reported record fourth quarter net income, excluding special items, of $125 million, or $0.94 per diluted share, compared to $77 million, or $0.55 per diluted share in 2013. This quarter’s results compare to a First Call analyst consensus estimate of $0.93 per share.
  • Reported record full-year net income, excluding special items, of $571 million, or $4.18 per diluted share, compared to $383 million, or $2.70 per diluted share in 2013.
  • Reported net income for the fourth quarter under Generally Accepted Accounting Principles (GAAP) of $148 million, or $1.11 per diluted share, compared to net income of $78 million, or $0.56 per diluted share in 2013.
  • Reported net income for the full year under GAAP of $605 million, or $4.42 per diluted share, compared to net income of $508 million, or $3.58 per diluted share in 2013.
  • Declared a $0.20 per share dividend, up 60% from the prior quarter. The dividend will be paid on March 10, to shareholders of record as of February 24, 2015.
  • Paid $0.125 per-share quarterly cash dividend on December 3, bringing total dividend payments in 2014 to $68 million.
  • Repurchased 7,316,731 shares of common stock for an average price of $47.63 during 2014 for $348 million, or 6.9% of market capitalization at the beginning of 2014. Since 2007, Air Group has used $827 million to repurchase 49 million shares at an average price of $16.85.
  • Grew passenger revenues by 8% compared to the fourth quarter of 2013, and by 7% compared to full-year 2013.
  • Generated record full-year adjusted pretax margin of 17.2% in 2014, compared to 12.4% in 2013.
  • Achieved return on invested capital of 18.6% in 2014, compared to 13.6% in 2013.
  • Generated over $1.0 billion in operating cash flows and $344 million in free cash flows in 2014.
  • Lowered adjusted debt-to-total capitalization ratio to 31% as of Dec. 31, 2014.
  • Held $1.2 billion in unrestricted cash and marketable securities as of Dec. 31, 2014.
  • Became one of only two U.S. airlines with investment grade credit ratings

Year-to-date highlights of Alaska Air Group’s five-year strategic plan:
Safety & Compliance

  • Launched “Ready, Safe, Go” safety campaign designed to increase safety awareness across the Air Group System.

    People Focus

  • Awarded a record $116 million in incentive pay to employees for 2014, or more than one month’s pay for most employees. Over the last five years, employees have earned more than $473 million in incentive pay, averaging 8.7% of annual pay.
  • Signed a five-year agreement with Alaska Airline’s Flight Attendants in December 2014.
  • Signed a six-year contract with Horizon’s aircraft technicians and fleet service agents in June 2014.
  • Signed a five-year contract with Alaska’s clerical, office, and passenger service employees in April 2014.
  • Signed a four-year contract with Horizon’s dispatchers in April 2014.
  • Completed “Gear Up” – an intensive leadership workshop for over 1,200 leaders at Alaska and Horizon.

    Hassle-free Customer Experience

  • Ranked “Highest in Customer Satisfaction Among Traditional Network Carriers” by J.D. Power and Associates for the seventh year in a row.
  • Ranked as the best airline in the U.S. by The Wall Street Journal’s “Middle Seat” scorecard for two consecutive years.
  • Ranked highest by frequent fliers in the first-ever J.D. Power Airline Loyalty/Rewards Program Satisfaction Report.
  • Held the top spot in U.S. Department of Transportation on-time performance among the largest eight U.S. airlines for the 12 months ended November 2014.
  • Named No. 1 on-time carrier in North America for the fourth year in a row by FlightStats in February 2014.
  • Launched online self-tag baggage options for passengers flying from Seattle to San Diego, Anchorage and Juneau.
  • Became the launch customer of Boeing’s new, innovative, high-capacity 737 Space Bins, which will increase bag capacity in the cabin by 48%.

    Energetic & Compelling Brand

  • Launched Alaska Beyond? in-flight experience featuring gourmet Tom Douglas signature meals, new streaming in-flight entertainment, and power at every seat on Alaska’s 737-800/900/900ER aircraft.
  • Received the 2014 Community Impact Award from Seattle Business Magazine.
  • Celebrated the opening of the Alaska Airlines Center sports complex at the University of Alaska Anchorage.
  • Committed over $7 million to support local communities, including job training for workers at the Seattle-Tacoma airport, STEM-focused education programs at Seattle’s Museum of Flight, and Seattle’s new bicycle sharing program.
  • Flew 13 relief flights to Los Cabos, Loreto, and Mazatlan, Mexico and transported approximately 2,000 passengers to safety following Hurricane Odile.

    Low Fares, Low Costs, and Network Growth

  • Ordered ten additional Boeing 737-900ERs, which will further strengthen Alaska’s fuel-efficient fleet.
  • Exercised options for two Q400 aircraft to be delivered in 2017.
  • Completed 100% of the cabin improvement project, adding new Recaro seats and power at every seat for 95 aircraft.
  • Increased fuel efficiency (as measured by seat-miles per gallon) by 2.1% over 2013.
  • Added split-scimitar winglets to 48 planned aircraft, which are expected to improve fuel efficiency by about 1.5% per aircraft.
  • Lowered unit costs excluding fuel and special items for the fifth consecutive year, to the lowest level ever.
  • Grew Seattle departures by 4% in 2014 and committed to growing Seattle departures by 10% in 2015.
  • Added 16 routes during 2014. New routes launched and announced in the fourth quarter are as follows:

    New Non-Stop Routes Launched in Q4

    New Non-Stop Routes (Launch Date)

    Portland to Puerto Vallarta

    Las Vegas to Mammoth Lakes (1/15/2015)

    Seattle to Cancun

    San Diego to Kona (3/5/2015)

    Portland to Los Cabos

    Seattle to Washington D.C. (Dulles) (3/11/2015)

    ?

    Seattle to Milwaukee (7/1/2015)

    ?

    Seattle to Oklahoma City (7/1/2015)

    ?

    Portland to St. Louis (7/1/2015)

    ?
    SEATTLE ? Alaska Air Group, Inc. (NYSE: ALK) today reported fourth quarter 2014 GAAP net income of $148 million, or $1.11 per diluted share, compared to GAAP net income of $78 million, or $0.56 per diluted share in 2013. Excluding mark-to-market fuel hedge gains of $6 million ($4 million after tax, or $0.03 per diluted share), a benefit related to the curtailment of certain postretirement benefit plans and a one-time gain associated with the settlement of a legal matter for $30 million in aggregate ($19 million after tax, or $0.14 per diluted share), the company reported record fourth quarter 2014 net income of $125 million, or $0.94 per diluted share, compared to net income, excluding mark-to-market fuel hedge gains, of $77 million, or $0.55 per diluted share, in 2013.

    The company reported full-year 2014 GAAP net income of $605 million, compared to $508 million in the prior year.?Excluding the impact of the items noted in the table below, the company reported record net income of $571 million, or $4.18 per diluted share for 2014, compared to net income of $383 million, or $2.70 per diluted share in 2013.

    “Record earnings and the number one airline ranking in The Wall Street Journal for the second year in a row are proof that our 13,000 employees continue to do a great job serving our customers and running a reliable operation,? said CEO Brad Tilden. ?The substantial increase in the dividend underscores our commitment to shareholders and our confidence in the future.?

    The following table reconciles the Company’s adjusted net income and earnings per diluted share (EPS) during the full year and fourth quarters of 2014 and 2013 to amounts as reported in accordance with GAAP:
    ?

    ?

    Three Months Ended December 31,

    ?

    2014

    ?

    2013

    (in millions, except per share amounts)

    Dollars

    ?

    Diluted EPS

    ?

    Dollars

    ?

    Diluted EPS

    Reported GAAP net income

    $

    148

    ?

    ?

    $

    1.11

    ?

    ?

    $

    78

    ?

    ?

    $

    0.56

    ?

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

    (4

    )

    ?

    (0.03

    )

    ?

    (1

    )

    ?

    (0.01

    )

    Special items, net of tax

    (19

    )

    ?

    (0.14

    )

    ?

    ?

    ?

    ?

    ?

    ?

    Non-GAAP adjusted income and per share amounts

    $

    125

    ?

    ?

    $

    0.94

    ?

    ?

    $

    77

    ?

    ?

    $

    0.55

    ?

    ?

    ?

    Twelve Months Ended December 31,

    ?

    2014

    ?

    2013

    (in millions, except per share amounts)

    Dollars

    ?

    Diluted EPS

    ?

    Dollars

    ?

    Diluted EPS

    Reported GAAP net income

    $

    605

    ?

    ?

    $

    4.42

    ?

    ?

    $

    508

    ?

    ?

    $

    3.58

    ?

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

    (15

    )

    ?

    (0.11

    )

    ?

    (5

    )

    ?

    (0.03

    )

    Special items, net of tax

    (19

    )

    ?

    (0.13

    )

    ?

    ?

    ?

    ?

    ?

    ?

    Special mileage plan revenue, net of tax

    $

    ?

    ?

    ?

    $

    ?

    ?

    ?

    $

    (120

    )

    ?

    $

    (0.85

    )

    Non-GAAP adjusted income and per share amounts

    $

    571

    ?

    ?

    $

    4.18

    ?

    ?

    $

    383

    ?

    ?

    $

    2.70

    ?



    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 fourth quarter and full year results will be simulcast via the Internet at 8:30 a.m. Pacific time on Jan. 22, 2015. It can be accessed through the company’s Web site at www.alaskaair.com/investors. For those unable to listen to the live broadcast, a replay will be available after the conclusion of the call.

 

Source = alaska airlines
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