Best quarter in years at Alaska

Oct 23, 2009 (The News Tribune - McClatchy-Tribune Information Services via COMTEX) -- ALK | Quote | Chart | News | PowerRating -- Alaska Air Group, despite reduced passenger traffic and lower fares, on Thursday announced profits with special items of $87.6 million in the third quarter.

That compares with a loss of $86.5 million in the same quarter in 2008.

This year's third quarter, traditionally the busiest quarter for the airline, was "one of the best quarters we've had in a very long time," Alaska chairman Bill Ayer told analysts and reporters in a conference call.

Without the effects of special items such as fuel hedges, the company made $83 million in the quarter or $2.33 a share. Analysts polled by Zacks Research had predicted profits of $2.26 a share.

The SeaTac-based company's turnaround was fueled by a huge difference in fuel prices between this year's third quarter and last's. During last year's third quarter, oil prices hit $147 a barrel. During this year's, prices were half that or less.

The airline holding company, parent of Alaska Airlines and Horizon Air, also reworked its schedule to cut capacity in weaker markets such as California, Arizona and Nevada and to expand to new markets such as Houston and Austin and additional islands in Hawaii. Today the airline begins flying from Seattle-Tacoma International Airport to Atlanta.

"Our work to reduce capacity to better match demand, redeploy aircraft into promising new markets and achieve record operational reliability contributed to our best quarterly financial performance in many years," Ayer said.

While improving its profits, both Alaska and Horizon achieved better on-time performance. Alaska was the top on-time performer among major domestic airlines every month this year from April through September, and Horizon was near the top among smaller carriers.

New fees for checked baggage also contributed to the company's profit margin. Since the July 7 imposition of those fees, the airlines have received $23 million in new revenues without a noticeable diminishment in passenger market share to the only major airline that doesn't impose checked baggage fees, Southwest.

Alaska's profits came during a quarter when many of its large and small competitors were reporting losses or, at best, small profits.

Delta Air Lines, the world's largest carrier, reported third quarter losses of $161 million this week. American Airlines' parent, AMR, said its losses for the July through September period were $395 million.

Phoenix's US Airways lost $80 million in the same period. Continental Airlines reported a narrower loss, $18 million, in the third quarter. United Airlines was in the red $57 million for the quarter. Southwest Airlines said it lost $16 million in the quarter including one-time charges.

On the positive side, JetBlue Airways said it made $15 million in the quarter. AirTran Holdings of Orlando reported a net profit of $10.4 million.

John Gillie: 253-597-8663

john.gillie@thenewstribune.com

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