Majestic Research

Reuters

Alaska Air Beats View, Shares Jump

By Paritosh Bansal
Published: July 25, 2006

NEW YORK, July 25 (Reuters) - Alaska Air Group Inc. , parent of Alaska Airlines, on Tuesday reported a better-than-expected quarterly profit as fuller flights and higher fares offset increased fuel costs, sending its shares up 3 percent.

Alaska Air, like other U.S. carriers, has been hurt by high fuel costs, but the domestic airline industry has seen its fortunes reverse as carriers cut back on capacity and increase fares.

Strong demand during the busy summer travel season has also helped as airlines have been able to push through fare increases and still fly fuller planes.

“In general it has been encouraging results from the airline so far this quarter,” Majestic Research analyst Matthew Jacob said.

Alaska’s net income in the second quarter more than tripled to $55.5 million, or $1.38 per share, from $17.4 million, or 56 cents per share, in the year-ago quarter.

Excluding a restructuring charge of 6 cents per share and mark-to-market hedging gains and losses, Alaska reported a profit of $1.50 per share, compared with analysts’ average expectation of $1.28 per share, as compiled by Reuters Estimates.

Operating revenue rose to $873 million from $756.5 million.  Cash and short-term investments were about $1.1 billion as of June 30, up from $983 million on Dec. 31.

Alaska Airlines passenger traffic in the quarter increased 7.2 percent on a capacity increase of 5.2 percent.

Aircraft fuel expenses, including hedging gains and losses, increased to $199.8 million in the quarter, up from $147.7 million in the year-earlier period.

Alaska’s shares were up $1.12, or 3.1 percent, at $37.02 during morning trading on the New York Stock Exchange.