Alaska Airlines and Horizon Air 2013 Annual Report Download - page 98

the third quarter as a result of vacation travel,
including increased activity in the state of
Alaska. However, we have taken steps over the
past few years to better manage the seasonality
of our operations by adding flights to leisure
destinations, like Hawaii, and expanding to cities
in the mid-continental and eastern U.S.
In addition to passenger loads, factors that could
cause our quarterly operating results to vary
include:
• general economic conditions and resulting
changes in passenger demand,
• changes in fuel costs,
• pricing initiatives by us or our competitors,
• the timing and amount of maintenance
expenditures (both planned and unplanned),
and
• increases or decreases in passenger and
volume-driven variable costs.
Many of the markets we serve experience
inclement weather conditions in the winter,
causing increased costs associated with deicing
aircraft, canceling flights, and reaccommodating
displaced passengers. Due to our geographic
area of operations, we can be more susceptible
to adverse weather conditions, particularly in the
state of Alaska and the Pacific Northwest, than
some of our competitors, who may be better able
to spread weather-related risks over larger route
systems.
No material part of our business or that of our
subsidiaries is dependent upon a single
customer, or upon a few high-volume customers.
EMPLOYEES
Our business is labor intensive. As of
December 31, 2013, we employed 13,177
(10,201 at Alaska and 2,976 at Horizon) active
full-time and part-time employees. Wages and
benefits, including variable incentive pay,
represented approximately 42% of our total non-
fuel operating expenses in both 2013 and 2012.
Most major airlines, including ours, have
employee groups that are covered by collective
bargaining agreements. Airlines with unionized
work forces have higher labor costs than carriers
without unionized work forces, and they may not
have the ability to adjust labor costs downward
quickly enough to respond to new competition. At
December 31, 2013, labor unions represented
83% of Alaska’s and 49% of Horizon’s
employees. Our relations with our U.S. labor
organizations are governed by the Railway Labor
Act (RLA). Under this act, collective bargaining
agreements do not expire but instead become
amendable as of a stated date. If either party
wishes to modify the terms of any such
agreement, it must notify the other party in the
manner prescribed by the RLA and/or described
in the agreement. After receipt of such notice,
the parties must meet for direct negotiations,
and if no agreement is reached, either party may
request the National Mediation Board (NMB) to
initiate a process including mediation,
arbitration, and a potential “cooling off” period
that must be followed before either party may
engage in self-help.
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