Alaska Air Group Reports Record First Quarter 2014 Results

Financial Highlights:

• Reported record first quarter net income, excluding special items, of $89 million, or $1.28 per diluted share, compared to adjusted net income of $44 million, or $0.62 per diluted share in the prior-year quarter. This quarter’s results compare to a First Call analyst consensus estimate of $1.24 per share.

• Recorded net income for the first quarter under Generally Accepted Accounting Principles (GAAP) of $94 million or $1.35 per diluted share, compared to net income of $37 million, or $0.51 per diluted share in 2013.

• Reported record adjusted pretax margin for the first quarter of 11.8%.

• Achieved trailing 12-month return on invested capital of 14.8% compared to 13.4% in the 12 months ended March 31, 2013.

• Paid a $0.25 per-share quarterly cash dividend on March 11 totaling $17 million. This is a 25% increase from the previous cash dividend payment of $0.20 per-share.

• Repurchased 352,851 shares of common stock for $30 million in the first quarter of 2014.

• Lowered adjusted debt-to-total-capitalization ratio by 3%, to 32%, from December 31, 2013.

• Held $1.4 billion in unrestricted cash and marketable securities as of March 31, 2014.

Operational Highlights:

• Held the No. 1 spot in U.S. Department of Transportation on-time performance among the 9 largest U.S. airlines for the twelve months ended February 2014.

• Named No. 1 on-time carrier in North America for the fourth year in a row from FlightStats in February 2014. For 2013, Alaska Airlines had the best on-time departure and on-time arrival statistics, which were approximately three points higher than the second place airlines in both categories.

• Launched online self-tag baggage options for passengers flying from Seattle to San Diego, Anchorage, or Juneau with plans to launch at other airports later in the summer.

• Reached agreement on a five-year contract with 2,500 clerical, office and passenger service employees at Alaska Airlines, represented by the International Association of Machinists and Aerospace Workers.

• Reached agreement on a four-year contract with Horizon Air dispatchers, represented by the Transport Workers Union.

• Began Bombardier Q-400 service from Anchorage to Fairbanks and Kodiak in the state of Alaska, operated by Horizon Air.

• Announced service to New Orleans, Tampa, Fla., Detroit, Baltimore, and Albuquerque, N.M., from Seattle, as well as service to Kalispell, Mont., from Portland, Ore.

• Filed an application to begin seasonal nonstop service between Seattle and Cancun, Mexico.

SEATTLE — Alaska Air Group, Inc., (NYSE: ALK) today reported first quarter 2014 GAAP net income of $94 million, or $1.35 per diluted share, compared to $37 million, or $0.51 per diluted share in the first quarter of 2013. Excluding the impact of mark-to-market fuel hedge adjustments of $8 million ($5 million after tax, or $0.07 per diluted share), the company reported record adjusted net income of $89 million, or $1.28 per diluted share, compared to adjusted net income of $44 million, or $0.62 per diluted share, in 2013.

“Our record first quarter results reflect strong demand for our service and the efforts we’ve taken to improve the value we bring to our customers,” CEO Brad Tilden said. “Our solid foundation of award-winning service, excellent operational performance, low costs and low fares, and the best employees in the business will help us sustain our success in the face of increasing competition.”