Alaska Air Group Posts First Quarter 2010 Profit
Alaska Air Group, the parent company of Alaska Airlines and Horizon Air based in Seatac, Washington, accomplished something in the first quarter which many in the airline industry have had difficulty achieving of late, a profit. While many air carriers are fighting for survival, Alaska Air Group stated it earned $5.3 million dollars in the first quarter fo 2010, compared with a loss of $19.2 million dollars in the first quarter of 2009. The company's stock has more than doubled to over $40 per share in the past year.
Alaska's revenues rose 11.8 percent from the first quarter of 2009 to $829.9 million. The airline has been helped by generally lower costs and a largely domestic focus. The company has cut capacity and done a good job of keeping flights mostly full. However, Alaska has been hit by higher fuel prices. It paid $207.3 million dollars for aircraft fuel in the first quarter, compared to $157.7 million dollars a year earlier.
The result is also impressive in that Alaska, with its Seattle–Tacoma hub, and extensive route system to Alaska, is more seasonal than other airlines. January through March tend to be the slowest months for the airlines. Typically, their earnings are greater the remaining months of the year. Alaska and Horizon account for nearly half of all commercial passenger flights to and from Sea-Tac Airport.
Alaska has adapted to changing market conditions in the past few years. Due to the economic downturn, the airline reduced its number of flights up and down the West Coast and to Mexico. However, when Hawaii and ATA both went out of business in 2008, Alaska moved in to the Hawaii market and now operates 14 flights a day to Hawaii from the West Coast. Overall, Alaska operates fewer plans that it did a few years ago.
In the past year, Alaska has added additional fees. The company now charges $20 for each of a passenger's first three bags, recently increasing the first bag fee by $5. However, first–class passengers and "elite frequent fliers" are exempt from fees for their first two bags.
With an improved balance sheet, Alaska will pay cash for four new Boeing 737s this year, which is great news for the Puget Sound area's economy. However, Alaska's financial results may make it an increasingly attractive target for takeover by a larger carrier. Alaska, a 78 year–old company, is currently the ninth–largest U.S. airline ranked by passenger miles flown. The airline has close marketing relationships and code–sharing arrangements with American and Delta Airlines.