Thursday, 25 April 2019

Alaska Air 2019 first quarter results

Alaska Air Group reports First Quarter 2019 results

Photo Alaska Air
Alaska Air Group Inc., today reported first quarter 2019 GAAP net income of $4 million, or $0.03 per diluted share, compared to $4 million, or $0.03 per diluted share in the first quarter of 2018. Excluding the impact of merger-related costs and mark-to-market fuel hedge adjustments, the company reported adjusted net income of $21 million, or $0.17 per diluted share, compared to $18 million, or $0.14 per diluted share, in 2018.

"We performed well in the first quarter despite severe winter storms in the Pacific Northwest," said Alaska CEO Brad Tilden. "The leadership team and I want to thank our employees for running the operation safely, and as smoothly as possible, and for taking great care of our guests throughout the quarter. Our margin improvement initiatives gained traction despite the storms, and we are optimistic about the rest of 2019."




Financial Highlights:

Reported net income under Generally Accepted Accounting Principles (GAAP) of $4 million, or $0.03 per diluted share for the first quarter of 2019 and 2018.
Reported net income for the first quarter of 2019, excluding special items such as merger-related costs and mark-to-market fuel hedge accounting adjustments, of $21 million, or $0.17 per diluted share, compared to $18 million or $0.14 per diluted share, in the first quarter of 2018. This quarter's adjusted results compare to the First Call analyst consensus estimate of $0.12 per share.
Paid a $0.35 per-share quarterly cash dividend in the first quarter, a 9% increase over the dividend paid in the first quarter of 2018.
Repurchased a total of 214,891 shares of common stock for approximately $13 million in the first three months of 2019.
Generated approximately $470 million of operating cash flow in the first three months of 2019, including merger-related costs.
Held $1.4 billion in unrestricted cash and marketable securities as of March 31, 2019.
Maintained debt-to-capitalization ratio of 47% as of March 31, 2019, similar to the 47% as of Dec. 31, 2018.


Operational Highlights:

Launched commercial service from Paine Field in Everett, Washington, to eight West Coast destinations and began service from Seattle to Columbus, Ohio, and El Paso, Texas.
Completed painting 25 Airbus aircraft in Alaska livery, and expect to complete the remainder of the fleet in the second quarter.
Announced plans to build a new Alaska Lounge in Terminal 2 at San Francisco International Airport.
Introduced a new Alaska Airlines Visa Signature Card sign-up promotion offering up to 40,000 miles to new cardholders.
Added four Boeing 737-900ER aircraft to the mainline operating fleet in the first quarter of 2019.
Recognition and Awards:

The following table reconciles the company's reported GAAP net income and earnings per diluted share (diluted EPS) for the three months ended March 31, 2019 and 2018 to adjusted amounts.


Three Months Ended March 31,

2019

2018
(in millions, except per-share amounts)
Dollars

Diluted EPS

Dollars

Diluted EPS
GAAP net income and diluted EPS
$
4


$
0.03


$
4


$
0.03

Mark-to-market fuel hedge adjustments
(4)


(0.03)


(13)


(0.11)

Special items - merger-related costs
26


0.21


6


0.05

Special items - other




25


0.20

Income tax effect of reconciling items above
(5)


(0.04)


(4)


(0.03)

Non-GAAP adjusted net income and diluted EPS
$
21


$
0.17


$
18


$
0.14


FamilyTrip


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Alaska Air Group, Inc.







Three Months Ended March 31,
(in millions, except per-share amounts)
2019

2018

Change
Operating Revenues:





Passenger revenue
$
1,716


$
1,684


2
%
Mileage Plan other revenue
110


107


3
%
Cargo and other
50


41


22
%
Total Operating Revenues
1,876


1,832


2
%
Operating Expenses:





Wages and benefits
557


536


4
%
Variable incentive pay
35


39


(10)
%
Aircraft fuel, including hedging gains and losses
420


409


3
%
Aircraft maintenance
120


107


12
%
Aircraft rent
83


74


12
%
Landing fees and other rentals
132


126


5
%
Contracted services
72


81


(11)
%
Selling expenses
72


78


(8)
%
Depreciation and amortization
106


94


13
%
Food and beverage service
49


50


(2)
%
Third-party regional carrier expense
41


37


11
%
Other
138


141


(2)
%
Special items - merger-related costs
26


6


NM

Special items - other


25


NM

Total Operating Expenses
1,851


1,803


3
%
Operating Income
25


29

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