Alaska Airlines reported a 23% increase in first-quarter net income Thursday, which the company said set a record, based on lower fuel costs and a boost in passenger revenue.
The Seattle-based carrier said net income rose to $184 million, or $1.46 per diluted share, compared to $149 million, or $1.12 per diluted share, during the same period a year earlier. The results came on a 6% increase in revenue, to more than $1.3 billion.
The net income beat the $1.42 per share projected in a poll of analysts by S&P Global Market Intelligence.
“We are proud to report record first-quarter results,” CEO Brad Tilden said in a statement.
The improvements included a 4% gain in passenger revenue, to $1.1 billion. The mainline airline grew revenues 3% and the regional airline grew 11%, the company said. The number of passengers grew 7%, to 7.8 million from 7.3 million.
Overall fuel costs were 29% lower, at $167 million compared to $235 million for the same period a year earlier.
The company paid a quarterly dividend of 27.5 cents per share, a 38% increase from a year earlier. And the company bought 1.7 million shares of stock for $127 million.
The earnings report came two weeks after the airline announced it would buy the San Francisco-based Virgin America, in a deal valued at $2.6 billion.
The next step will be a vote by Virgin shareholders expected sometime in the second quarter, Tilden told investment analysts.
After that, the Justice Department review could allow swift clearance in as little as 60 days, Tilden said. But even if not that fast, the deal is expected to be completed this year, he said.
Consultants will be hired to assist with integrating the two airlines, but the budget will be tightly controlled, Tilden said. Besides integrating the operating certificate and union agreements, Alaska will focus on holding onto Virgin customers, Tilden said.
While Alaska is known for reliable, low-cost flights, Virgin marketed amenities such as fleetwide wi-fi, touchscreen seatback entertainment and power outlets at every seat.
“There is a very strong allegiance to that company. That’s why the company is so attractive to us,” Tilden said. “The biggest challenge is going to be bringing the customers together.”
Kyle Levine, the airline’s general counsel, said the regulatory review has just begun, but that airline officials have begun meeting with Justice officials to describe why the deal is good for travelers.
“So far, so good,” Levine said. “We’re answering their questions.”
If allowed by the Justice Department, the deal would follow four mega-mergers since 2008 that resulted in American, Delta, United and Southwest controlling about 80% of the U.S. market.
“We are looking forward to the integration process and are confident that our team has what it takes to build the premier airline for people living on the West Coast.,” Tilden said.
USA Today
Alaska Airlines post 23% increase in profit in Q1
