(Adds fleet and job cuts at subsidiary)
WASHINGTON, April 23 Alaska Air Group Inc
(ALK.N), parent of Alaska Airlines, reported a wider quarterly
loss on Thursday as revenue could not keep pace with
skyrocketing fuel costs.
Fuel costs for the first quarter rose 45 percent, or $89
million, to $282 million. Fuel is the company's largest
expense, and Alaska Air Group's problems mirror the rest of the
"Given the magnitude of this increase and the softening
economy, we're taking aggressive actions now to improve our
business and profitability," said Bill Ayer, chairman and chief
The company announced cost cuts and revenue enhancements
that it hopes will boost full-year pretax income by about $150
First, it said it would further reduce the size of the
fleet at its regional Horizon Air subsidiary, which will result
in "some job losses." It hopes to address those losses through
Also, within two years, Horizon Air will go from a fleet of
65 aircraft and three aircraft types to a fleet comprised of
only larger, 76-seat Bombardier Inc (BBDb.TO) Q400s, the
Alaska Airlines and Horizon Air are evaluating routes to
remove frequency in underperforming markets and redeploy in
more profitable areas. The airlines anticipate shifting 3
percent to 5 percent of existing network capacity to generate
new revenue in the fall schedule.
Alaska Air Group also will raise various fees later this
spring and summer, including charging $25 for a second checked
bag for most passengers.
Alaska Airlines and Horizon Air will fly more direct
routes, establish procedures for using only one engine during
taxiing, and use more ground-based power systems rather than
aircraft auxiliary power while at the gate. Alaska Air Group
hopes to save 1 million gallons of jet fuel per month through
The company reported a first-quarter net loss of $35.9
million, or 97 cents per share, compared with a net loss of
$10.3 million, or 26 cents per share, a year earlier. Both
periods include adjustments resulting from mark-to-market fuel
Excluding the impact of these adjustments, the company
would have reported a loss of $36.3 million, or 98 cents per
share, compared with a loss of $15.8 million, or 39 cents per
share, a year earlier.
Wall Street analysts had expected a loss of 95 cents per
share, according to Reuters Estimates.
Revenue rose to $839 million from $759 million a year
earlier. Mainline passenger traffic increased 11.3 percent on a
capacity increase of 6.8 percent. Load factor increased by 3
percentage points to 74.4 percent.
(Reporting by John Crawley, editing by Gerald E. McCormick and