Alaska Air Group 2Q Net Income Doubles
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SEATTLE (AP) — The parent of Alaska Airlines said Thursday that second-quarter profit more than doubled with the help of full airplanes and higher fares.
Alaska Air Group Inc. reported net income of $67.5 million, or 93 cents per share, up from $28.8 million, or 39 cents per share, a year ago.
Excluding fuel-hedging costs because of the second-quarter dip in oil prices, the company said it would have earned $1.53 per share.
Analysts, who usually exclude one-time items from their forecasts, had expected $1.51 per share, according to FactSet.
Revenue rose 9.3 percent to $1.21 billion, matching analysts’ forecast.
CEO Brad Tilden said revenue was helped by strong travel demand and the airline’s growing route network. During the second quarter, Alaska added about 10 new routes including San Jose, Calif., to Honolulu and Seattle to Philadelphia.
There were fewer empty seats on Alaska Airlines flights — occupancy averaged 87.4 percent in the quarter, up from 85 percent and higher than most of its bigger rivals. Average fares rose 1.9 percent on Alaska, although they dipped 2.1 percent on the company’s much smaller regional airline, Horizon Air.
The company said money from bag fees in the first half of 2012 fell $4 million to $76 million. Executives said more customers were avoiding the fees by carrying bags on board or getting elite frequent-flier status on Alaska or its partner airlines. Most airlines waive bag fees for elite members. Ray Neidl, an analyst for Maxim Group LLC, said Alaska should be able to increase other types of extra revenue including selling more hotel bookings and car rentals, especially with its new service to Hawaii. Such extras are profitable and not that risky for Alaska Air, he said.
Fuel spending for Alaska and Horizon increased 8.6 percent. Wages and benefits rose 6.6 percent.
Seattle-based Alaska has carved out a profitable niche along the West Coast by selling its own service and teaming with other airlines, including American and Delta, to sell more seats. Alaska has been the subject of speculation about a possible merger with American Airlines parent AMR Corp.
Asked whether Alaska had received any merger-related communications from AMR, Tilden said, “Our general counsel is in the room … appreciate the question, but we’re not going to respond.”
Alaska Air’s shares rose 17 cents to close at $34.62.
– Copyright 2012 The Associated Press.