Alaska Airline's Profit Slides Amid High Fuel and Other Expenses

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Oct24

Alaska Airline's Profit Slides Amid High Fuel and Other Expenses

Rob Willers

October 24, 2006

Know More:

One of the industry's consistent profit maker actually posted a 3rd quarter loss in 2006. Alaska Air Group Inc., (ALK) the parent of Alaska Airlines posted a loss of just over $17 million dollars for the three months. Compared to last year when the airline made a profit of $90 million for the same three months.

The reason the company is stating for the loss: charges stemming from the early buyout of MD-80 aircraft leases, severance costs for hundreds of clerical, office and passenger service employees, and fuel-hedging losses.

Now the loss is not a lot compared to the average of the industry in recent years. However the loss taken for the early buyout of the MD-80 leases was a wise decision. The airline is modernizing their fleet and the MD-80s are gas hogs.

"We need to continue reducing costs, improving processes and growing in order to offer our customers a product they prefer at a price they're willing to pay," said Bill Ayer, chairman and chief executive of the Seattle-based airline.

Alaska Air Group Inc., stock price took a big hit tumbling nearly 7.5% in late afternoon trading to settle around $41.28 a share.

SeattlePI.com

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