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Alaska Air Group, Inc. (ALK)
Q2 2010 Earnings Call
July 22, 2010 11:30 a.m. ET
Shannon Albert - IR
Bill Ayer - CEO
Brandon Pedersen - CFO
Brad Tilden - President
Glenn Johnson - President, Horizon Air
Joe Sprague - VP, Marketing
Andrew Harrison - VP, Planning and Revenue Management
Jay Schaefer - VP, Finance
Bill Greene - Morgan Stanley
Hunter Keay - Stifel Nicolaus
Jamie Baker - JPMorgan
Duane Pfennigwerth - Raymond James
Michael Linenberg - Deutsche Bank
Helane Becker - Dahlman Rose
Dan Mckenzie - Hudson Securities
Jim Higgins - Soleil Securities
Glenn Engel - Bank of America/Merrill Lynch
Kevin Crissey - UBS
Steve O'Hara - Sidoti & Company
Previous Statements by ALK
» Alaska Air Group Inc. Q1 2010 Earnings Call Transcript
» Alaska Air Group, Inc. F4Q09 Earnings Conference Call
» Alaska Air Group Inc. Q4 2008 Earnings Call Transcript
Thanks, Melissa. Hello, everyone and thank you for joining us for Alaska Air Group's second quarter 2010 earnings call. Today Alaska Air Group's CEO, Bill Ayer, will provide a company overview; CFO, Brandon Pedersen will talk about Air Group's financial position and the Presidents of our two operating subsidiaries, Brad Tilden and Glenn Johnson will comment on the financial and operational performance, and future initiatives of Alaska and Horizon. Other members of the senior management team are also present to help answer your questions.
Today's call will include forward-looking statements that may differ materially from actual results. Additional information on risk factors that could affect our business can be found in our periodic SEC filings available on our website. Our presentation includes some non-GAAP financial measures and we have provided reconciliation between the most directly comparable GAAP and non-GAAP measures in our earnings release.
This morning, Alaska Air Group reported a second quarter GAAP net profit of $58.6 million. Excluding the impact of mark to market adjustments and connection with our fuel hedge portfolio, and CRJ transition cost at Horizon, Air Group reported an adjusted net profit of $84 million or $2.29 per share. This compares to a first call mean estimate of $2.12 per share and to the last year's adjusted net profit of $26.5 million or $0.72 per share. Again excluding unusual items Air Group reported a year-to-date profit of 97.1 million or $2.65 per share compared to a 1.1 million or $0.03 per share for the first half of 2009.
Additional information about expected capacity changes, unit cost, fuel hedge positions, capital expenditures and fleet count can be found in our investor update included on Form 8-K and available on our website at alaskaair.com.
With that I will turn the call over to Bill Ayer.
Thanks Shannon and good morning everyone. Before we get into the quarters results I want to talk about the leadership changes that we recently announced. After eight years at Horizon helm and more than 28 years in various positions at both Alaska and Horizon Jeff Pinneo has retired as Horizon's President and CEO. Glenn Johnson who formerly served as Alaska Air Groups Chief Financial Officer has replaced Jeff as President of Horizon.
That filling Glenn's role is Brandon Pedersen who many of you already know through his roles in finance and investor relations. Jeff took the CEO at Horizon just a few months following 9/11 and help them navigate through some of the industries most challenging years. He led the company as it made substantial improvements and operational performance and customer satisfaction.
And speaking for all of us here let me see how grateful I am for all that Jeff has accomplished and the legacy he has helped build over all these years.
Glenn Johnson has spent 12 of his 28 years at Air Group overseeing finance and then customer service at Horizon. That background combined with his most recent roles running Alaska's operations and finance organizations gives Glenn the experience and perspective to continue the transformation of Horizon.
Glenn will talk about those plans in a moment. And finally Brandon Pedersen CFO replacing Glenn, Brandon joined us in 2003 and is well prepared to take on this expanded role. Like, Glenn and Brad before him, Brandon has committed to the same conservative financial principles that have differentiated us for many years and to achieving an acceptable long term return for investors.
I have the utmost confidence in Glenn and Brandon and the fact that we can make this type of leadership change from within our own ranks is a result of the focus we placed on developing people over the years and it's truly an honor for me to work with so many talented and dedicated leaders at both companies.
This quarter's results represent Alaska Air Group's best adjusted quarterly profit in our history. Our results were driven by higher load factors, improved pricing, bag fee revenues and good cost control partially offset by higher fuel cost.
For the third year on a row J.D. Power and associates ranked Alaska airlines highest and customer satisfaction among traditional network carriers in North America.
Brad will talk more about this in a minute but I want to express my thanks to all employees for consistently providing the kind of customer service that has earned this recognition.
And last week Alaska Airlines was named number one among legacy airlines worldwide in Aviations Week's Annual Top-Performing airline annual study. Their report notes the benefits of been smaller and more nimble and highlight some of the things that we have been working on for sometime such as taking a long term view of the business, focusing on a few key areas and executing well. Aviation Week's recognition is attributed to our entire team including our supervisors, managers and other leaders in Seattle and throughout our system. Our ability to set aggressive goals and make the changes required to achieve them are core to our success and we will continue to build those capabilities.