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Saturday, July 28, 2012 - Page updated at 04:30 a.m.
Alaska Air tops expectations, doubling profit
By Drew DeSilver
Seattle Times business reporter
Fuller planes and higher fares meant fatter profits for Alaska Air Group.
The Seattle-based air carrier said Thursday it earned $67.5 million in the second quarter, more than twice its profit in the same period last year, as strong growth in passenger revenues more than offset higher fuel prices.
Adjusted for Alaska's extensive fuel-price hedging program, the company's profit worked out to $1.53 a share, two cents above the consensus Wall Street estimate. Revenue was $1.2 billion, a 9.3 percent increase.
Nearly 6.6 million paying passengers rode on the company's two airlines, Alaska Airlines and Horizon Air, in the quarter, 5.1 percent more than in the same period last year. The company filled 86.5 percent of the available seats with paying passengers — a key metric called "load factor" — up from 84.3 percent in the year-earlier period.
Higher fares boosted another important metric, "passenger revenue per available seat mile." Alaska Air took in 15.28 cents per mile for each available seat, up from 14.86 cents in the year-earlier period.
The company added several routes to its predominantly West Coast-based network in the quarter, among them Seattle-Philadelphia, Portland-Bellingham and flights to Honolulu from both San Jose and Oakland.
Earlier this month Alaska began nonstop flights from Seattle to Fort Lauderdale, Fla. The company expects to launch a Portland-Washington, D.C., route next month, and a Seattle-San Antonio nonstop in September.
Alaska paid an average of $3.40 a gallon for jet fuel in the second quarter, up from $3.28 in the same period a year ago, but the company said it expects that to drop to $3.09 a gallon in the current third quarter.
The company also projected that with the planned new routes, its total capacity of "available seat miles" — fleetwide airplane seats multiplied by total miles flown — would rise about 3.9 percent, from 7.94 billion in the second quarter to 8.2 billion to 8.3 billion in the third quarter.
Alaska Air's stock climbed 17 cents, or 0.5 percent, to close at $34.62 Thursday.
Drew DeSilver: 206-464-3145 or email@example.com
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