Alaska Air Q4, Full Year Profit Down

Alaska Air reported its fourth quarter and full year 2016 results, with net profit falling in both periods.

In the quarter to end December 2016, net income fell 40 percent to USD$114 million, with operating revenue up 11 percent at $1.52 billion, but expenses were up 14 percent to $1.28 billion.

Major cost increases were wages and benefits, up 13 percent, and aircraft fuel costs which rose 12 percent in the quarter.

Alaska Air Group carried 8.75 million passengers in Q4, a 10.4 percent increase from the prior year period.

Traffic in revenue passenger miles rose 13.1 percent on an ASM (available seat miles) capacity increase of 10.3 percent. Load factor came in at 84.5 percent, a 2 percentage point increase.

For the full year 2016, net income dropped 4 percent to $814 million on an operating revenue increase of 6 percent at $5.93 billion. Expenses came in at $4.58 billion, a 7 percent rise.

Alaska Air spent $123 million less on fuel and hedging costs in 2016, a 13 percent drop to $831 million, but wages grew 10 percent to $1.38 billion.

The group flew 34.3 million passengers during the year, a 7.5 percent increase from 2015. The takeover of Virgin America on December 14 accounted for only a negligible increase in passengers carried.

“2016 was an incredible year for Alaska in almost every way, and we are even more excited as we look forward to 2017 and beyond,” Alaska Air chief executive Brad Tilden said in a statement.

During the year, Alaska Air added 19 Boeing 737-900ERs to its fleet, bringing the total to 155 aircraft. Virgin America operated 63 aircraft at the end of 2016.