Isle routes warm Alaska Air’s forecast
SEATTLE » Alaska Air Group Inc.
, while warning of a softening U.S. economy, high fuel prices and increased competition in some markets this year, said yesterday its newly launched Hawaii service is doing well.
In a conference call with analysts, Chief Executive Bill Ayer cited solid demand for flights to Hawaii, a market Alaska Airlines entered last year with service from Anchorage and Seattle, and the carrier's move toward a more fuel-efficient fleet of Boeing 737s as causes for optimism.
Ayer said the Hawaii service "was received with great fanfare by customers and employees alike, and demand in these new markets is strong and the trends look good."
Bradley Tilden, executive vice president finance & chief financial officer, told analysts that the carrier's advance-booking load factors are strong, having been bolstered by "very solid Hawaii bookings."
The carrier said yesterday it swung to a fourth-quarter profit due to special gains, though adjusted results reflected a wider loss than Wall Street had expected, as fares failed to keep up with higher fuel costs.
The parent company of Alaska Airlines and Horizon Air posted a profit of $7.4 million, or 19 cents per share, versus a loss of $11.6 million, or 29 cents per share, a year earlier. Revenue rose 8 percent to $853.4 million, due mostly to rising passenger revenue.
However, adjusted for fuel hedging as well as special charges and benefits, Alaska Air's loss widened to $17.9 million from $3.4 million.
Analysts polled by Thomson Financial had forecast a loss of 32 cents per share on revenue of $845.1 million.
"It's frustrating to report a fourth-quarter adjusted loss in what has been a solid year relative to other carriers," Ayer said in a statement. "The loss was driven primarily by skyrocketing fuel costs combined with fares that have not kept pace."
Though the industry has tried to pass on those higher fuel costs to customers as oil touched new highs, fierce competition has prevented big fare hikes.
Alaska Air Group bought half of its fuel in advance last quarter, using contracts that tied its jet fuel costs to oil prices of $62.27 a barrel, on average, well below the market rate. That saved the company $29 million during the three months ended Dec. 31.
For the full year, the company gained more than $53 million by hedging just over half its fuel at $58.83 a barrel.