Alaska Airlines and Horizon Air 2009 Annual Report Download - page 140

and 3%, respectively, compared to 2009.
Historical cost per ASM excluding fuel and other
special items can be found in Item 6. “Selected
Consolidated Financial and Operating Data.”
CONSOLIDATED NONOPERATING INCOME
(EXPENSE)
Net nonoperating expense was $64.5 million in
2009 compared to $41.0 million in
2008. Interest income declined $9.8 million
compared to 2008 primarily as a result of lower
average portfolio returns, partially offset by a
higher average balance of cash and marketable
securities. Interest expense declined $1.8
million on lower average interest rates on our
variable-rate debt on a relatively stable average
debt balance. Capitalized interest was $15.6
million lower than in 2008 because of lower
advance aircraft purchase deposits and the
deferred future aircraft deliveries.
CONSOLIDATED INCOME TAX EXPENSE
(BENEFIT)
Our consolidated effective income tax rate on
pretax income or loss for 2009 was 40.1%,
compared to 36.3% for 2008. The difference
between the effective tax rates for both periods
and our marginal tax rate of approximately 37.8%
is primarily the magnitude of nondeductible
expenses, such as employee per-diem costs and
stock-based compensation expense recorded for
certain stock awards.
Our effective tax rate can vary significantly
between quarters and for the full year, depending
on the magnitude of non-deductible expenses in
proportion to pretax results.
2008 COMPARED WITH 2007
Our consolidated net loss for 2008 was $135.9
million, or $3.74 per share, compared to net
income of $124.3 million, or $3.07 per diluted
share, in 2007. Both periods include gains and
losses arising from fuel-hedging activities. In
2008, there were several other items, as noted
below, that affect the comparability between the
two years:
• restructuring charges of $12.9 million ($8.1
million after tax, or $0.22 per share) related
to the reduction in work force at Alaska;
• fleet transition charges of $61.0 million
($38.2 million after tax, or $1.05 per share)
related to the ongoing transitions out of the
MD-80 and CRJ-700 fleets; and
• a $42.3 million benefit ($26.5 million after
tax, or $0.73 per share) related to a change
in the terms of our Mileage Plan program.
As shown in the table below, excluding these
items, our consolidated net income for 2008
was $4.4 million, or $0.12 per diluted share,
compared to $91.6 million, or $2.26 per diluted
share, in 2007. See previous discussion under
“Adjusted Non-GAAP Earnings and Per-Share
Amounts” for additional information about these
non-GAAP measures.
Years Ended December 31
2008 2007
(in millions except
per share amounts) Dollars
Diluted
EPS Dollars
Diluted
EPS
Net income and diluted
EPS, excluding items
below ............ $ 4.4 $ 0.12 $ 91.6 $2.26
Change in Mileage Plan
terms, net of tax . . . 26.5 0.73 ——
Restructuring charges,
netoftax ......... (8.1) (0.22) ——
Fleet transition costs—
MD-80, net of tax . . . (29.8) (0.82) ——
Fleet transition costs—
CRJ-700, net of
tax .............. (8.4) (0.23) ——
Mark-to-market fuel
hedge adjustments,
netoftax ......... (89.2) (2.46) 32.7 0.81
Realized losses on
hedge portfolio
restructuring, net of
tax .............. (31.3) (0.86) ——
Net income and diluted
EPS as reported .... $(135.9) $(3.74) $124.3 $3.07
ALASKA AIRLINES
Alaska reported a loss before income taxes of
$153.3 million during 2008 compared to income
before income taxes of $215.0 million in 2007.
The $368.3 million difference between the
periods is primarily due to the $424.9 million
increase in aircraft fuel expense (including
hedging gains and losses) compared to the prior
period, $47.5 million of fleet transition costs,
and $12.9 million of restructuring charges
partially offset by a $151.4 million increase in
operating revenues.
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