Alaska Air Profit Dips 46 Pct On Fuel Costs

April 26, 2017

Alaska Air Group posted a 46 percent drop in 2017 first quarter net income to USD$99 million, caused mainly by increased fuel costs.

The result in the quarter to end March compares with the $184 million net profit the group made in the same period of 2016.

Operating revenue for the group that includes Alaska Airlines, Horizon Air and Virgin America was $1.75 billion, a 30 percent jump that reflects the inclusion of Virgin into group accounts. Comparative figures from Alaska for combined results including assumptions for Virgin in 1Q16, show a 2 percent rise in total revenue.

Costs for the period rose 50 percent to $1.58 billion, but with Virgin filtered into the 2016 results, costs rose only 14 percent. Fuel contributed the largest increase in costs, jumping from $238 million last year to $339 million in 2017. Merger-related costs came in at $40 million.

The combined group carried just over 10 million passengers in the quarter, against 7.84 million, excluding Virgin in last year’s quarter. Adding in Virgin’s figures for 1Q16, passenger numbers were up 4.3 percent year-on-year.

Using Alaska’s assumptions for the combined carriers, group RPM (revenue passenger miles) traffic was up 4.7 percent in the quarter, on an ASM (available seat miles) capacity increase of 4.9 percent. Load factor edged 0.2 percentage points lower to 81.3 percent.

Passenger revenue per available seat mile (PRASM) dropped 3.3 percent on a combined basis.

“With the biggest integration decisions behind us, the hard work of executing the plan now lies ahead. We've laid a foundation for growth with our recent announcements of 37 new routes, and the leadership team is fully focused on running a great airline,” Alaska chief executive Brad Tilden said.

Alaska Air acquired Virgin America late last year in a deal valued at $2.6 billion. Alaska announced in March that it would be retiring the Virgin brand by 2019, rebadging the airline as Alaska Airlines.

(Airwise)