Friday, 25 October 2019

Alaska Air Group reports third quarter 2019 results

Alaska Air Group reported third-quarter 2019 GAAP net income of $322 million, or $2.60 per diluted share, compared to $217 million, or $1.75 per diluted share in the third quarter of 2018. Excluding the impact of merger-related costs and mark-to-market fuel hedge adjustments, the company reported adjusted net income of $326 million, or $2.63 per diluted share, compared to $237 million, or $1.91 per diluted share in 2018.

"Our teams at Alaska, Horizon and McGee delivered industry-leading customer service and operational reliability that helped drive strong third quarter results," said Alaska Air Group CEO Brad Tilden. "Our adjusted pretax profit margin of nearly 18% was 3.6 percentage points higher than last year - fueled by our commitment to keep costs low and by the impressive 8% revenue growth that our commercial team delivered. I want to thank our employees for everything they're doing to make Alaska what we are today - and for helping us shape what we're going to be in the future. They are the best in the industry, and I believe these results demonstrate that."





Financial Highlights:

Reported net income for the third quarter of 2019 under Generally Accepted Accounting Principles (GAAP) of $322 million, or $2.60 per diluted share, compared to net income of $217 million, or $1.75 per diluted share in the third quarter of 2018.
Reported net income for the third quarter of 2019, excluding merger-related costs and mark-to-market fuel hedge accounting adjustments, of $326 million, or $2.63 per diluted share, compared to $237 million or $1.91 per diluted share, in the third quarter of 2018. This quarter's adjusted results compare to the First Call analyst consensus estimate of $2.52 per share.
Paid a $0.35 per-share cash dividend in the third quarter, a 9% increase over the dividend paid in the third quarter of 2018.
Repurchased a total of 874,019 shares of common stock for approximately $53 million in the first nine months of 2019.
Generated $1.4 billion of operating cash flow in the first nine months of 2019.
Made a voluntary contribution of $65 million to defined benefit pension plans in the third quarter.
Held $1.6 billion in unrestricted cash and marketable securities as of Sept. 30, 2019.
Reduced debt-to-capitalization ratio to 42% as of Sept. 30, 2019 compared to 47% as of Dec. 31, 2018.
Operational Highlights:

Alaska's clerical, office, passenger service, ramp and stores employees, represented by the International Association of Machinists, ratified a new five-year agreement in August.
Opened a new 15,000+ square foot flagship lounge in the North Satellite at Sea-Tac International Airport in July.
Reallocated flying to expand offerings between the Pacific Northwest and California, increasing network utility and providing more non-stop service on the West Coast.
Completed cabin interior renovations of the 25th Airbus aircraft during the third quarter.
Installed high-speed satellite Wi-Fi on the 54th mainline aircraft.
Recognition and Awards:

Named "Best U.S. Airline" by Condé Nast Traveler for the second consecutive year.
Ranked as top U.S. airline in Newsweek's 2020 Best Customer Service awards.
Mileage Plan ranked first in the U.S. News & World Report's list of Best Airline Rewards Programs for the fifth consecutive year.
Ranked as the top U.S. airline in the Dow Jones Sustainability Index for the third consecutive year.
Ranked among Forbes' 2019 global list for "World's Best Employers."



Three Months Ended September 30,

2019

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

Diluted EPS

Dollars

Diluted EPS
GAAP net income and diluted EPS
$
322


$
2.60


$
217


$
1.75

Mark-to-market fuel hedge adjustments




5


0.04

Special items - merger-related costs
5


0.04


22


0.18

Income tax effect of reconciling items above
(1)


(0.01)


(7)


(0.06)

Non-GAAP adjusted net income and diluted EPS
$
326


$
2.63


$
237


$
1.91




Nine Months Ended September 30,

2019

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

Diluted EPS

Dollars

Diluted EPS
GAAP net income and diluted EPS
$
588


$
4.74


$
414


$
3.34

Mark-to-market fuel hedge adjustments
(1)


(0.01)


(30)


(0.24)

Special items - merger-related costs
39


0.31


67


0.54

Special items - other




25


0.20

Income tax effect of reconciling items above
(9)


(0.07)


(15)


(0.12)

Non-GAAP adjusted net income and diluted EPS
$
617


$
4.97


$
461


$
3.72









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