Alaska Airlines and Horizon Air 2009 Annual Report Download - page 144

HORIZON AIR
Horizon reported a loss before income taxes of
$55.8 million during 2008 compared to $10.7
million in 2007. The $45.1 million decline in
profitability is primarily due to higher fuel costs
and fleet transition costs, partially offset by
lower non-fuel operating costs and higher
operating revenues.
HORIZON REVENUES
In 2008, operating revenues increased $15.5
million, or 2.2%, compared to 2007. Horizon’s
passenger revenues are summarized in the
following table:
Years Ended December 31
2008 2007
(dollars in millions) Revenues % ASMs Revenues % ASMs
Passenger revenue
from Horizon
“brand” flying . . . $429.2 61 $391.3 52
Revenue from CPA
with Alaska ..... 293.7 39 283.4 35
Revenue from CPA
with Frontier
JetExpress ..... —— 34.5 13
Total passenger
revenue and % of
ASMs ......... $722.9 100% $709.2 100%
Line-of-business information is presented in the table below. In the CPAs, Horizon is insulated from
market revenue factors and is guaranteed contractual revenue amounts based on operational capacity.
As a result, yield and load factor information for the CPA arrangements are not presented.
Year Ended December 31, 2008
Capacity and Mix Load Factor Yield RASM
2008
Actual
(000,000)
2007
Actual
(000,000)
Change
Y-O-Y Actual
Point
Change
Y-O-Y Actual
Change
Y-O-Y
2008
Actual
2007
Actual
Change
Y-O-Y
Brand Flying ........ 2,221 2,086 6.5% 71.1% (0.7) 27.20¢ 4.1% 19.82¢ 19.20¢ 3.2%
Alaska CPA ......... 1,396 1,383 0.9% NM NM NM NM 21.04¢ 20.49¢ 2.7%
Frontier CPA ........ —509 (100.0)% NM NM NM NM NM 6.77¢ NM
System Total ....... 3,617 3,978 (9.1)% 72.9% (0.5) 27.43¢ 12.9% 20.29¢ 18.06¢ 12.4%
NM = Not meaningful
System-wide, Horizon’s operating unit revenues
increased 12.4% compared to 2007. However,
the increase was largely due to the shift in
capacity out of Frontier JetExpress flying (which
produced relatively low RASM because of the
nature of the contract) to higher RASM brand and
Alaska CPA flying. The Frontier JetExpress
operation ceased in November 2007.
Horizon brand flying includes routes in the
Horizon system not covered by the Alaska CPA.
Horizon has the inventory and revenue risk in
these markets. Passenger revenue from Horizon
brand flying increased $37.9 million, or 9.7%, on
a 6.5% increase in brand capacity and a 3.2%
increase in unit revenues. The increase in unit
revenues was due to a 4.1% increase in yields in
those markets, partially offset by a 0.7-point
decline in load factor.
Revenue from the CPA with Alaska totaled
$293.7 million during 2008 compared to $283.4
million in 2007. The increase is primarily driven
by the 2.7% increase in unit revenues on
relatively flat capacity. This revenue is eliminated
in consolidation.
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