By Regan Foster
Alaska Journal of Commerce

Seattle-based Alaska Air Group Inc. registered a $43.1 million net loss for the fourth quarter of 2002 to close a year marked by fiscal decline. The company lost $118.6 million last year, some $51.4 of which came from an one-time goodwill right-off, the company report.

That means the group's investors are facing a loss of $1.62 per share for the quarter and $2.53 per share for 2002. A year earlier, the air group lost $37.4 million between October and December, or $1.41 per share; and $43.4 million, or $1.64 per share, for the year, according to the company.

Alaska Air Group's subsidiaries, Alaska Airlines Inc. and Horizon Air Industries Inc., registered fourth-quarter losses of $58.6 million and $5.8 million, respectivly. In the same time period of 2001, Alaska Airlines lost some $18.8 million while Horizon saw losses of $35 million.

Airline executives participating in a quarterly conference call Jan. 30 said a year-to-year comparison of 2002 with 2001 -- when the events of Sept. 11 resulted in a $100 million government subsidy for the company -- makes the recent losses seem more severe then they are.

Representatives of the air group said they were pleased with the growth their companies saw in terms of actual passengers flown, but the continuation of low-cost tickets and discounted travel generated little in terms of revenue.

"We've had good year-over-year growth since February," said William Ayer, Alaska Airlines chief executive. "Yields have been disappointing, but our load factor is up over the fourth quarter of 2001 and we're introducing new destinations from our Seattle hub. Our operations continued to run well for the quarter."

Ayer added that advanced bookings for the first quarter of 2003 are also up overall from 2002. Both January and March are on the same level as last year in terms of passenger volume, but February is showing a slight increase over the same month last year. The airline is seeing its biggest increase in leisure travel, Ayer said.

"We believe that, overall, our customers are receiving the rate of high-quality customer care they have come to expect," he said.

Horizon Air also saw a "relatively strong fourth quarter," said Jeff Pinneo, the regional airline's chief executive. The company's per plane costs dropped 14 percent while capacity rose 12 percent over 2001, and last December was the strongest the company has ever recorded, he said.

"Only June and August ran higher then December," Pinneo said. "The full year performance is the best we've ever posted."

Despite the continued slump in the air traffic market, the air group will continue to hold a long-term focus for its airlines, said John Kelly, the chairman and chief executive of the company. Alaska Air will add 11 new airplanes to the fleet in 2003 and retire four, and Horizon Air will serve seasonal markets Outside.

"As expected, it was a difficult quarter ending yet another difficult year for both the industry and the Alaska Air Group," Kelly said. "But, our growth strategy seems to be working and we feel confident that the estimates we've had out there we will continue to achieve."