Alaska Airlines and Horizon Air 2013 Annual Report Download - page 3

TO OUR SHAREHOLDERS:
2013 was another excellent year for Alaska Air Group. It was a record year in many
respects, adding to a growing trend of great performance and execution — both
nancially and operationally. I’d like to share some of our accomplishments with
you, along with some of our thoughts about the future. But before I do, I want to
give you some background on how far we’ve come.
Alaska’s history dates back 82 years and over those years we’ve seen a tremendous
amount of change that has reshaped the industry and our company. We’ve
experienced government regulation and de-regulation, economic peaks and valleys,
including the “Great Recession,” a fuel crisis, the terrorist attacks of September 11,
and several rounds of consolidation. Through it all, airlines have come and gone — many disappearing
altogether and many more restructuring through bankruptcy. Today, the industry looks nothing like
it did 20 years ago, or even 10 years ago. Service has improved, airlines are more stable, and they’re
performing better nancially (though the industry’s combined result since the Wright Brothers took o at
Kitty Hawk is still a net loss!). A few airlines, led by Alaska Air Group, are returning capital to shareholders
in meaningful ways — a very positive sign of real change. We’ll have to see if the industry’s improved
performance persists, but the last few years look good and many experts expect further improvement in
the next few.
So, a question I sometimes ask is: “Through all of this change, why is Alaska Air Group still here?” We’re
a relatively small player in the U.S.airline industry with around 3.5% of the own capacity and we’re
competing against carriers that are as much as eight times our size. Yet, we are still here — and we are
still Alaska Airlines. My answer — and this is based on what customers frequently tell us — is that it’s
because of our people and, in particular, because of the friendly and personal service they provide. Sure,
there are other factors — a safe and industry-leading operation, low fares, a focus on low costs, and
dedication to doing the right thing. But, at the end of the day, all of these things are due to our people.
So that leads us to 2013. Here is a short list of the things our people accomplished:
• First, we continue to be safe. Both Alaska and Horizon have strong safety records, and we are
working to get better every day. Safety is our top priority and the foundation for everything else we do.
• Second, we received our sixth consecutive J.D. Power Award for Highest in Customer Satisfaction
Among Traditional Network Carriers in North America. This is one of the most respected measures of
service in our industry, and we are very proud to have received this recognition from our customers.
• Third, our operational performance continued to lead the industry, with 87% of our mainline ights
completed on time. Flightstats.com ranked Alaska the No. 1 major airline in North America for the
fourth consecutive year and
The Wall Street Journal rated us the best major airline in the nation in
two of the last three years.
• Fourth, we nalized new ve-year agreements with Alaska’s pilots and Horizon’s ight attendants,
and we recently reached a tentative ve-year agreement with Alaska’s clerical, oce, and passenger
service personnel. We are optimistic we’ll reach agreement with Alaska’s ight attendants on a new
contract soon. We are at our best when our people are onboard and fully engaged, and we’re pleased
to have long-term contracts in place for most of our employee groups.
• Fifth, we met or exceeded nearly all of our operational and nancial goals, which resulted in record
incentive pay for our employees. Each employee at Alaska and Horizon received a bonus that
represents at least 4½ weeks of pay. As the company performs well, our employees are rewarded,
and we strongly believe this alignment benets all of our stakeholders.