Alaska Airlines and Horizon Air 2009 Annual Report Download - page 128

gains of $88.8 million ($55.2 million after
tax, or $1.53 per share), compared to net
losses of $142.3 million ($89.2 million after
tax, or $2.46 per share) in 2008.
• 2009 included the new pilot contract
transition costs of $35.8 million ($22.3
million after tax, or $0.62 per share).
• 2008 included fleet transition costs of
$61.0 million ($38.2 million after tax, or
$1.05 per share) related to the ongoing
transitions out of the MD-80 and CRJ-700
fleets.
• 2008 included realized losses on the early
termination of fuel-hedge contracts originally
scheduled to settle in 2009 and 2010 of
$50 million ($31.3 million after tax, or
$0.86 per share).
• 2008 included a $42.3 million benefit
($26.5 million after tax, or $0.73 per share)
related to a change in the terms of our
Mileage Plan program.
• 2008 included restructuring charges of
$12.9 million ($8.1 million after tax, or
$0.22 per share) related to the reduction in
work force at Alaska.
ADJUSTED (NON-GAAP) RESULTS AND
PER-SHARE AMOUNTS
We believe disclosure of earnings excluding the
impact of these individual charges is useful
information to investors because:
• It is consistent with how we present
information in our quarterly earnings press
releases;
• We believe it is the basis by which we are
evaluated by industry analysts;
• Our results excluding these items are most
often used in internal management and
board reporting and decision-making;
• Our results excluding these adjustments
serve as the basis for our various employee
incentive plans, thus the information allows
investors to better understand the changes
in variable incentive pay expense in our
consolidated statements of operations; and
• It is useful to monitor performance without
these items as it improves a reader’s ability
to compare our results to those of other
airlines.
Although we are presenting these non-GAAP
amounts for the reasons above, investors and
other readers should not necessarily conclude
that these amounts are non-recurring, infrequent,
or unusual in nature.
Excluding the items noted above, and as shown
in the following table, our consolidated net
income for 2009 was $88.7 million, or $2.45
per diluted share, compared to $4.4 million, or
$0.12 per diluted share, in 2008.
Years Ended December 31
2009 2008
(in millions except
per share amounts) Dollars
Diluted
EPS Dollars
Diluted
EPS
Net income and diluted
EPS, excluding noted
items ............ $ 88.7 $ 2.45 $ 4.4 $ 0.12
Change in Mileage Plan
terms, net of tax . . . —— 26.5 0.73
New pilot contract
transition costs, net
oftax ............ (22.3) (0.62) ——
Restructuring charges,
netoftax ......... —— (8.1) (0.22)
Fleet transition costs –
MD-80, net of tax . . . —— (29.8) (0.82)
Fleet transition costs –
CRJ-700, net of
tax .............. —— (8.4) (0.23)
Mark-to-market fuel
hedge adjustments,
netoftax ......... 55.2 1.53 (89.2) (2.46)
Realized losses on
hedge portfolio
restructuring, net
oftax ............ —— (31.3) (0.86)
Net income and diluted
EPS as reported .... $121.6 $ 3.36 $(135.9) $(3.74)
INDIVIDUAL SUBSIDIARY RESULTS
Our consolidated results are primarily driven by
the results of our two operating carriers. Alaska
and Horizon reported pretax income of $183.8
million and $22.8 million, respectively, in 2009.
Financial and statistical data and an in -depth
discussion of the results of Alaska and Horizon
are on the following pages. For a reconciliation of
these subsidiary results to the consolidated
results of Air Group, see Note 13 in the
consolidated financial statements.
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