Alaska Air Profits Rise Considerably

Alaska Air reported a second quarter net profit of nearly $300 million, a 14% increase from the previous year.

The end product, which includes the influence of the takeover of Virgin America last December, comes on the back of a 41% increase in operating revenue to $2.1 billion.

“We had a very solid quarter, driven by a growing customer base and strong revenue performance," chief executive Brad Tilden said. "Although we're dealing with a number of operational challenges.”

Operating expenses rose by 50% to $1.61 billion as the airline’s wage bill increased by 40% in the quarter, partly as a result of a pay deal with pilots at Horizon Air.

With the inclusion of Virgin America’s results and increased flying by group airlines, the fuel bill jumped 71% to $344 million. It paid an average of $1.71 for fuel in Q2, from $1.53 in the previous year period.

Group airlines carried 11.4 million passengers during the quarter, up from the second quarter’s 8.65 million. RPM passenger traffic rose by 44.2% on an ASM capacity increase of 41.1 percent. Load factor ended up being raised to 86.8%.

Passenger unit revenue edged up 1.3%, but unit costs, excluding fuel and special items, climbed by 2%.

Alaska Air took delivery of two Airbus A321neos in the quarter, from an order for ten made by Virgin America prior to the takeover. As an all-Boeing operator, Alaska may choose to cancel or at least defer the purchase of Airbus aircraft in favor of maintaining this position.