Alaska Air Group reports record profits in 3Q
An Alaska Airlines jet flies high over Las Vegas in this file photo. On Oct. 25, the company announced a record quarterly profit of $150.3 million in the third quarter. Net earnings for the year are up nearly 50 percent, to $271.1 million.
Alaska Air Group, Inc. announced record profits when its third quarter earnings were released Oct. 25.
The airline company reported $150.3 million in net earnings for the quarter, compared with $131.1 million in the third quarter of 2011. Total revenue for the quarter was $1.3 billion.
“This is the highest quarterly profit in our history and it’s the 14th consecutive quarterly profit that we’ve reported,” Brad Tilden, president and CEO, said.
Alaska Air Group manages Alaska Airlines and the smaller Horizon Air.
Gross year-to-date earnings stand at $3.5 billion, close to an 8 percent increase versus 2011. Net earnings show a more drastic improvement over last year for the same period, however.
The company reported its net income at $271.1 million for the first nine months this year, nearly a 50 percent jump over the $180.5 million through the same period in 2011, according to the quarterly report.
Tilden attributed the record returns to the company’s steady and prolonged success, allowing it to reduce debt, reward its shareholders and reinvest its profits. He also credited Alaska Air’s employees, adding that “our people are working together better than ever.”
During a conference call on the earnings, company officials reported an eight-point reduction in debt-to-capital ratio since the start of 2012, bringing it to 54 percent. In 2004, Alaska Air’s debt-to-capital ratio stood at 78 percent.
The group has also seen its equity grow from $665 million to $1.4 billion over that time.
Alaska Air Group Inc. Vice President of Finance Brandon Peterson said the company’s focus on reducing debt has played a key role in reducing costs.
“Net non-operating expenses were $4 million this quarter compared with $17 million in the third quarter of 2009, with much of that coming from lower interest expenses because we have much less debt than we did three years ago,” Peterson said.
Peterson also noted that Alaska Air has seen more than a 12 percent return on invested capital over the past year and expects 2012 to be the group’s third straight year with a return on its investments exceeding 10 percent.
In conjunction with its strong financial reports, Alaska Air Group has recently received several industry accolades. For the 12-month period ending in August 2012, the company was No. 1 in on-time performance among the 10 largest U.S. airlines, according to the U.S. Department of Transportation.
Travel + Leisure magazine also awarded Alaska Airlines with its Global Vision Award for 2012 for sustainability. The magazine accredited the award to the airline’s efforts to increase fuel-efficiency and its implementation of an in-flight recycling program.
In early October, Alaska Airlines announced an order for 50 new Boeing 737 aircraft that includes 37 of Boeing’s new 737 Max planes, which will be 13 percent more fuel-efficient than any similar-sized aircraft currently on the market, airline officials claim.
“Over the last several years we’ve seen the advantage of having modern, fuel-efficient aircraft that are bought at the right prices,” Tilden said. “ We’re extremely pleased that we secured aircraft to continue this pattern well into the future.”
Alaska Airlines opened new routes between Seattle and San Antonio and Fort Lauderdale, Fla.; Portland, Ore., and Washington, D.C., and San Diego and Orlando Fla., over the past year. In the summer of 2013 the airline will also begin non-stop service between Anchorage and Los Angeles. The expanded service represents Alaska’s continued plan for responsible growth, company officials said.
Despite being in a naturally volatile industry, Tilden is confident in the future of Alaska Air Group because of its proven strategy and workforce, he said.
“This sort long-term success and balanced, consistent execution has evaded most airlines,” Tilden said. “But we believe we have a solid plan and employees who know what’s at stake and are committed to our success.”
Elwood Brehmer can be reached at email@example.com.