Alaska Airlines and Horizon Air 2013 Annual Report Download - page 103

ITEM 1A. RISK FACTORS
If any of the following occurs, our business,
financial condition and results of operations
could suffer. In such case, the trading price of
our common stock could also decline. We
operate in a continually changing business
environment. In this environment, new risks may
emerge and already identified risks may vary
significantly in terms of impact and likelihood of
occurrence. Management cannot predict such
developments, nor can it assess the impact, if
any, on our business of such new risk factors or
of events described in any forward-looking
statements.
We have adopted an enterprise wide Risk
Analysis and Oversight Program designed to
identify the various risks faced by the
organization, assign responsibility for managing
those risks to individual executives as well as
align these risks with Board oversight. These
enterprise-level identified risks have been
aligned to the risk factors discussed below.
SAFETY, COMPLIANCE AND OPERATIONAL
EXCELLENCE
Our reputation and financial results could be
harmed in the event of an airline accident or
incident.
An accident or incident involving one of our
aircraft or an aircraft operated by one of our
codeshare partners or CPA carriers could involve
a significant loss of life and result in a loss of
confidence in our airlines by the flying public
and/or aviation authorities. We could experience
significant claims from injured passengers, by-
standers and surviving relatives, as well as costs
for the repair or replacement of a damaged
aircraft and its consequential temporary or
permanent loss from service. We maintain
liability insurance in amounts and of the type
generally consistent with industry practice, as do
our codeshare partners and CPA carriers.
However, the amount of such coverage may not
be adequate to fully cover all claims and we may
be forced to bear substantial economic losses
from an accident. Substantial claims resulting
from an accident in excess of our related
insurance coverage would harm our business
and financial results. Moreover, any aircraft
accident or incident, even if fully insured and
even if it does not involve one of our aircraft,
could cause a public perception that our airlines
or the equipment they fly are less safe or reliable
than other transportation alternatives, which
would harm our business.
Changes in government regulation imposing
additional requirements and restrictions on our
operations or on the airports at which we
operate could increase our operating costs and
result in service delays and disruptions.
Airlines are subject to extensive regulatory and
legal requirements, both domestically and
internationally, that involve significant
compliance costs. In the last several years,
Congress has passed laws, and the U.S. DOT,
the TSA and the FAA have issued regulations
that have required significant expenditures
relating to the maintenance and operation of
airlines and establishment of consumer
protections.
Similarly, there are a number of legislative and
regulatory initiatives and reforms at the federal,
state, and local level, including increasingly
stringent laws protecting the environment,
minimum wage requirements, and health care
mandates that could affect our relationship with
our workforce and cause our expenses to
increase without an ability to pass through these
costs.
Almost all commercial service airports are owned
and/or operated by units of local or state
governments. Airlines are largely dependent on
these governmental entities to provide adequate
airport facilities and capacity at an affordable
cost. Many airports have increased their rates
and charges to air carriers related to higher
security costs, increased costs related to
updated infrastructures, and other costs.
Additional laws, regulations, taxes, and airport
rates and charges have been proposed from time
to time that could significantly increase the cost
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ŠForm 10-K