Alaska Air Group Reports Record Adjusted Second Quarter Results

Second quarter highlights:

Record second quarter net income, excluding special items, of $89.6 million, or $2.44 per diluted share, compared to net income of $84.0 million, or $2.29 per diluted share, reported in the second quarter of 2010. This quarter’s results compare to a First Call mean estimate of $2.44 per share.

Net income under Generally Accepted Accounting Principles (GAAP) of $28.8 million, or $0.78 per diluted share, compared to net income of $58.6 million, or $1.60 per diluted share, in 2010.

13.7 percent improvement in revenues compared to the second quarter of 2010, which covered the 48.5 percent increase in economic fuel costs.

Ranked “Highest in Customer Satisfaction Among Traditional Network Carriers” in 2011 by J.D. Power and Associates for the fourth year in a row.

Non-fuel unit costs reduced by 3.1 percent.

Employee productivity improved 5.5 percent compared to the second quarter of 2010.

Saved $16.5 million on fuel hedge contracts that settled in the second quarter.

Held $1.2 billion in unrestricted cash and marketable securities as of June 30, 2011.

Adjusted debt-to-total capitalization ratio of 63 percent, lowest level since 1999.

Twelve-month return on invested capital of 11.5 percent.

Beginning May 14, 2011, SkyWest Airlines began flying certain regional routes under a capacity purchase arrangement with Alaska Airlines.

Alaska Airlines held the No. 1 spot in U.S. Department of Transportation on-time performance among the 10 largest U.S. airlines for the twelve months ending in May 2011.

Board authorized a new $50 million share repurchase program in late June. Since 2007, Air Group has repurchased approximately 7.6 million shares.

Alaska Air Group, Inc. (NYSE: ALK) today reported second quarter 2011 net income of $28.8 million, or $0.78 per diluted share, compared to net income of $58.6 million, or $1.60 per diluted share, in the second quarter of 2010. Excluding mark-to-market fuel hedge losses of $70.9 million ($44.1 million after tax, or $1.21 per diluted share) and fleet transition costs of $26.8 million ($16.7 million after tax, or $0.45 per diluted share), the company reported record second quarter 2011 net income of $89.6 million, or $2.44 per diluted share, compared to net income of $84.0 million, or $2.29 per diluted share, excluding special items in the second quarter of 2010.

“I am pleased to report our fifth consecutive record quarterly adjusted profit, in spite of a nearly 50 percent rise in our economic fuel costs,” Chairman and CEO Bill Ayer said. “Passenger revenues improved by $128 million, both through higher load factors and fares, covering the increased cost of fuel. I couldn’t be more proud of our team for our record-breaking financial and operational performance in such a challenging environment. And we’re especially honored that Alaska was awarded its fourth consecutive J.D. Power award. I want to give a huge thanks to our folks who are working hard every day to take care of customers.”