Alaska Air reports loss in 1st quarter

Posted: Friday, April 21, 2006

SEATTLE - Alaska Air Group, the parent of Alaska Airlines and Horizon Air, reported a first-quarter loss Thursday, blaming one-time charges including a drop in the value of its aging fleet of MD-80s and the company's decision to move to an all-Boeing 737 fleet.

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For the three months ended March 31, Alaska Air Group reported a net loss of $79.1 million, or $2.36 per share, versus a loss of $80.5 million, or $2.39 per diluted share, a year ago.

Operating revenue increased 14 percent to $735.4 million for the latest quarter, up from $642.5 million a year ago.

Last month, Alaska Airlines said it was investing $750 million to retire its MD-80s early, replacing them with 737s by the end of 2008. As a result of that decision, the company had to estimate the market value of the MD-80 fleet, recording a noncash impairment charge of $131.1 million.

Excluding those charges, Alaska Air said it would have posted earnings of $2.8 million, or 8 cents per share. That soundly beat the consensus forecast of analysts polled by Thomson Financial for a loss of 56 cents a share.

Shares of Alaska Air Group rose $1.65, or 4.7 percent, to $37.05 in trading Thursday on the New York Stock Exchange. The stock has traded in a 52-week range of $25.55 to $37.86.

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The increase in operating revenue was driven mostly by passenger revenue, which jumped to $679.5 million compared with $587 million a year ago. Both airlines reported a rise in passenger traffic: 5.2 percent for Alaska and 14. 8 percent for Horizon.

Fuel costs soared to $163.1 million, up from $38.5 million a year ago. Those costs included gains and losses from hedging, a tactic used to lower costs by locking in fuel costs ahead of time.

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