Alaska Airlines and Horizon Air 2009 Annual Report Download - page 8
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ŠFinancial Performance – We’re still short of delivering a 10 percent return on invested
capital, but the goal is firmly in view and we’re making steady progress. We have
maintained excess cash as a hedge against economic uncertainty, and we plan to
put some of that to work over the next couple of years. Potential uses include
repaying debt, paying cash for replacement aircraft, buying back shares and
contributing to our defined benefit plans.
Alaska Air Group Net Profit
*(5.9) mil. after accounting change.
See reconciliation of GAAP to adjusted amounts on pages 32 and 44
of Alaska Air Group’s 2009 Annual Report on Form 10-K.
Generally Accepted Accounting Principles (GAAP)
Adjusted for unusual items
2001 2002 2003 2004 2005 2006 2007 20092008
-150
-100
-50
0
50
100
150
-43.4
-88.3
-67.2 -67.5
13.5
-30.8
-15.3
5.2
84.5*
55.0
-54.5
135.8
124.3
91.6
121.6
88.7
4.4
-135.9
($ millions)
Although we haven’t accomplished
everything we mapped out in 2003,
we’ve made good progress and learned
some valuable lessons along the way.
We have become much better at
focusing our efforts on the most
important goals and quickly making the
changes needed to achieve them, while
not getting distracted by things we can’t
control.
Current Initiatives
As in 2009, our 2010 key initiative is to increase revenue. We are taking a three-pronged
approach that focuses on increasing non-ticket (or ancillary) revenues, improving the
merchandising of our product and engaging front-line employees in the marketing process.
We are redesigning the
alaskaair.com Web site to more
prominently feature hotel, car rental
and vacation offerings, thereby
providing customers with convenient,
one-stop shopping. In addition, we
plan to equip our 737 fleet with Wi-Fi
by the end of 2010.
Chart on right: In 2009, the economic downturn
resulted in lower demand, placing downward
pressure on average passenger revenue. The
decline was largely offset by new revenue from the
first bag fee that we initiated in July 2009.
$75
$100
$175
$150
$50
Average Revenue Per Passenger
2001 2009200820072002 2003 2004 2005 2006
*Includes Frontier Jet Express flying under a capacity purchase agreement.
Unit revenues and unit costs are lower for this flying than for the rest of
Horizon’s network.
$125
Horizon Air
Alaska Airlines
81
118
81
118
90
122
82
124
84*
130
92*
143
94*
145
157
98
157
95
4