Alaska Air Q2 Profit Up 13.8 Percent

Alaska Air Group reported a second quarter net profit of USD$296 million, a 13.8 percent increase from the previous year.

The result, which includes the impact of the takeover of Virgin America last December, comes on the back of a 41 percent increase in operating revenue to $2.1 billion.

“We had a very solid quarter, driven by a growing customer base and strong revenue performance," chief executive Brad Tilden said. "Although we're dealing with a number of operational challenges.”

Operating expenses rose by 50 percent to $1.61 billion as the airline’s wage bill increased by 41 percent in the quarter, partly as a result of a pay deal with pilots at its Horizon Air unit.

With the inclusion of Virgin America’s results and increased flying by group airlines, the fuel bill jumped 71 percent to $344 million. It paid an average of $1.71 for fuel in Q2, from $1.53 in the previous year period.

Group airlines carried 11.4 million passengers during the quarter, up from 2Q16’s 8.65 million. RPM passenger traffic rose by 44.2 percent on an ASM capacity increase of 41.1 percent. Load factor was up 1.9 percentage points to 86.8 percent.

Passenger unit revenue edged up 1.3 percent, but unit costs, excluding fuel and special items, climbed by 2.1 percent.

Alaska Air took delivery of two Airbus A321neos in the quarter, from an order for ten made by Virgin America prior to the takeover. As an all-Boeing operator, Alaska may defer or cancel some or all of the Airbus orders if it decides to maintain that position.