Overview: Alaska Airlines’ 2Q14 earnings highlights

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Company overview 

Alaska Air Group (ALK) was incorporated in 1985 in Delaware. It’s a holding company for Alaska Airlines and Horizon Air. It’s the seventh largest U.S. carrier providing passenger and cargo transportation services, one among the top ten airlines comprising almost 85% of the domestic market share by revenue passenger miles (or RPM).

The group, along with its regional partners, serves 100 cities in Alaska, the Lower 48, Hawaii, Canada, and Mexico. In 2013, it served 27 million passengers, with an average of 833 daily flights and a capacity of 33,600 million available seat miles.

Part1_2Q14 financial summary

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Alaska Airlines is the seventh largest airline in America by domestic RPM. For the year ending May 2014, market share by domestic RPM for Delta (DAL) was 16.5%, Southwest Airlines (LUV) was 16%, United (UAL) was 15.5%, American Airlines (AAL) was 12.6%, US Airways was 8.5%, JetBlue (JBLU) was 5.1%, and Alaska Airlines was 4.2%.

For more information on Alaska Airlines’ operations, click here.

Second quarter highlights

  • Total revenue increased by 9.5%, and unit revenue increased by 4%.
  • Cost per available seat miles (or CASM) decreased by 2.3% due to the decrease in fuel cost. CASM excluding fuel cost increased to 8.36 cents in 2Q14 (or the second quarter of 2014) from 8.321 cents in 2Q13, and operating margin increased to 19.1%.
  • Net margin increased to 12% and diluted EPS (or earnings per share) increased by ~60% to $1.19.
  • Cash and marketable securities increased by 13.5% to $1,510 million from $1,330 million in fiscal year 2013 (or FY13).
  • Capital expenditure during the first half of the year amounted to $350 million and debt repayments amounted to $64 million. Total debt balance reduced to $859 million from $871 million in FY13.
  • 1.1 million shares were repurchased and a cash dividend of $0.125 per share was paid.
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