Alaska Airlines and Horizon Air 2007 Annual Report Download - page 115

OTHER INFORMATION
SEASONALITY AND OTHER FACTORS
Our results of operations for any interim period
are not necessarily indicative of those for the
entire year because our business is subject to
seasonal fluctuations. Our operating income is
generally lowest (or if it be the case, our loss the
greatest) during the first and fourth quarters due
principally to lower traffic, generally increases in
the second quarter and typically reaches its
highest level during the third quarter as a result
of vacation travel, including increased activity in
the state of Alaska.
In addition to passenger loads, factors that could
cause our quarterly operating results to vary
include:
• pricing initiatives by us and our
competitors,
• changes in fuel costs,
• the timing and amount of maintenance
expenditures (both planned and
unplanned),
• increases or decreases in passenger
and volume-driven variable costs, and
• labor actions.
In addition to those factors listed above,
seasonal variations in traffic, the timing of
various expenditures such as maintenance
events and adverse weather conditions may
affect our operating results from quarter to
quarter. Many of the markets we serve
experience inclement weather conditions in the
winter, causing increased costs associated with
deicing aircraft, canceled flights and
accommodating 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.
Consequently, the loss of one or more of even
our largest customers would likely not have a
material adverse effect upon our financial
condition, results of operations or cash flows.
INSURANCE
We carry insurance for passenger liability and
property and aircraft damage in amounts and of
the type generally consistent with industry practice.
After September 11, 2001, aviation insurers
significantly reduced the amount of insurance
coverage for third-party liability for claims
resulting from acts of terrorism, war or similar
events. At the same time, the insurers
significantly increased the premiums for such
coverage as well as for aviation insurance in
general. Since then, however, our insurance
rates have been declining. During 2006 and
2007, our insurance rates fell below 2001
levels. We attribute this decline to general rate
reductions as well as the extensive safety
programs maintained by both of our airlines.
Pursuant to authority granted in the Air
Transportation Safety and System Stabilization Act,
the Homeland Security Act of 2002, as amended
by the Consolidated Appropriations Act 2008, the
U.S. government has offered, and we have
accepted, war risk insurance to replace commercial
war risk insurance through August 31, 2008.
OTHER GOVERNMENT MATTERS
We have elected to participate in the Civil
Reserve Air Fleet program, whereby we have
agreed to make available to the federal
government a certain number of aircraft in the
event of a military call-up. The government would
reimburse us for the use of such aircraft.
Participation in the program is a prerequisite for
bidding on various governmental travel contracts.
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ŠForm 10-K