SeaTac's Alaska Air Group on Thursday reported its best quarterly profits in history.
The airline holding company, parent of Alaska Airlines and regional carrier Horizon Air, reported a quarterly profit of $84 million excluding special items such as fuel hedges. Including those one-time costs, the airline company made $58.6 million in the quarter.
Its profits minus the adjustments compare with a profit of $26.5 million in the second quarter last year. On a per-share basis, the second quarter profits amounted to $2.29 a share compared with 2009’s second-quarter results of 72 cents a share.
Those 2010 results of a $2.29 per share profit compared with average analyst predictions of a profit of $2.12 a share.
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“Our second quarter adjusted net earnings represent the best quarterly profit in our history,” said Alaska Air Group Chairman Bill Ayer.
“The results were driven by strong revenue and good cost control, partially offset by higher fuel costs,” he said.
In addition to the record profits, Ayer crowed about several other achievements for the airlines:
• Aviation Week named Alaska as the best-performing legacy carrier in the world just this month, beating out perennial performer Singapore Airlines.
• J.D. Power and Associates named Alaska as having the highest customer satisfaction among traditional network carriers for the third year in a row.
• Alaska has topped the U.S. Department of Transportation’s on-time arrivals list for mainline carriers for 13 of the last 14 months. Horizon is near the top in on-time arrivals in its class of carriers.
Alaska Air employs about 6,100 people in Washington.
Small fees add up for Alaska Airlines
When airlines began charging extra fees for checked baggage two years ago, Alaska Airlines hung back.
But Alaska officials soon decided to charge $20 for each checked bag after seeing the financial results of other carriers who were charging baggage fees.
If you think a few dollars here and a few dollars there don’t make a difference, look at the results at Alaska, the smallest of the eight major U.S. carriers.
Baggage fees added $25 million to Alaska Airline’s bottom line in the second quarter, according to Brandon Pederson, Alaska Air Group chief financial officer. In the first year, the fees amounted to $98 million in extra revenue for the SeaTac-based carrier.
In the airline industry, Alaska competitor Southwest Airlines is now the only major airline that does not charge for checked baggage.
Has Alaska lost market share because of the new fee? Not significantly, Alaska executives said in a second-quarter earnings call Thursday.
What the airline industry calls “ancillary fees” – charges for everything from seat selection, early boarding, on-board meals and baggage to pillows and drinks – last year yielded airlines an additional $13.5 billion in extra income, according to a study by IdeaWorks, an airline consultancy firm.
So significant are those fees for discount airlines such as Ireland’s Ryanair that fee income is approaching the level of fare income, analysts say.