Alaska Airlines and Horizon Air 2007 Annual Report Download - page 136

ALASKA AIRLINES
Alaska reported income before income taxes of
$216.0 million during 2007 compared to a loss
before income taxes of $92.2 million in 2006.
The $308.2 million difference between the
periods is primarily the result of the fleet
transition and restructuring charges recognized
in 2006 totaling $214.3 million, combined with a
reduction in fuel expense following
mark-to-market fuel-hedging losses recorded in
2006 as compared to mark-to-market fuel-
hedging gains in the current year. These
mark-to-market adjustments are a result of
changes in the value of our fuel hedge portfolio
driven by changes in the price of crude oil.
The year’s most important trend was the
dramatic increase in raw and economic fuel
costs and the commensurate increase in
passenger revenue as we (and many of our
competitors) attempted to pass along the
increased fuel costs. See page 39 for a
discussion of raw and economic fuel costs.
ALASKA REVENUES
Total operating revenues increased $377.4
million, or 14.0%, in 2007 as compared to
2006. The new Capacity Purchase Agreement
with Horizon described above made up $265.0
million of the increase, with mainline revenues
(defined as passenger revenues from those
flights operating on Alaska Airlines jets plus
freight, mail and other revenues) contributing
$112.4 million of the increase. The components
of Alaska’s revenue are summarized in the
following table:
Years Ended December 31
(in millions) 2007 2006
%
Change
Passenger
Revenue—
mainline ........ $2,547.2 $2,453.1 3.8
Freight and mail .... 94.2 93.4 0.9
Other—net ........ 147.1 129.6 13.5
Total Mainline
Revenues ....... $2,788.5 $2,676.1 4.2
Passenger
Revenue—
purchased
capacity ........ 281.4 16.4 NM
Total Operating
Revenues ....... $3,069.9 $2,692.5 14.0
NM = Not Meaningful
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