Alaska Airlines and Horizon Air 2009 Annual Report Download - page 139

The total net expense recognized for hedges that
settled during the period was $10.3 million in
2009, compared to a net cash benefit of $20.9
million in 2008. These amounts represent the
net of the premium expense recognized for those
hedges and any cash received or paid upon
settlement.
We currently expect our economic fuel price per
gallon will be about $2.29 in the first quarter of
2010.
Aircraft Maintenance
Aircraft maintenance expense decreased $5.0
million, or 8.6%, primarily as a result of fewer
scheduled maintenance events and cost savings
from process improvement initiatives.
We expect maintenance costs will increase in
2010 primarily due to the timing of maintenance
events. We are working on certain initiatives
designed to mitigate these increases over the
long-term while maintaining our focus on a safe,
compliant and reliable operation.
Aircraft Rent
Aircraft rent expense declined $12.2 million, or
21.4%, as a result of the complete transition out
of the Q200 fleet, all of which were leased, and
the sublease of two CRJ-700 aircraft in late
2008.
We expect aircraft rent will be flat in 2010 as
compared to 2009 unless we are able to
remarket CRJ aircraft.
Selling Expenses
Selling expenses declined $4.0 million, or
12.9%, compared to the prior year as a result of
lower credit card and travel agency commissions
and lower ticket distribution costs due to the
decline in passenger traffic.
We expect selling expenses to be flat in 2010
compared to 2009 on our expectation of flat
capacity for the year.
Other Operating Expenses
Other operating expenses declined $3.3 million,
or 7.7%, compared to 2008. The decline is
primarily driven by a reduction in non-wage
passenger remuneration costs and flight crew-
related costs such as hotels and per-diems.
Fleet Transition Costs
Fleet transition costs associated with the
removal of Q200 aircraft from the operating fleet
were $8.8 million during 2009 compared to
$10.2 million in 2008. All Q200 aircraft have
been removed from the operating fleet. Should
we decide to restructure the sublease for the 16
Q200 currently subleased to a third-party carrier,
we will likely have future charges associated with
any transaction. At this time, we are unable to
estimate the timing or the amount of any future
charges.
During 2008, as a result of our decision to retire
the CRJ-700 fleet earlier than expected, we
recorded a $5.5 million impairment charge
associated with the two owned CRJ-700 aircraft
and related spare parts, $6.7 million associated
with a net loss on the sublease arrangement for
two leased CRJ-700 aircraft, and a $1.3 million
severance charge associated with the fleet
reduction.
Operating Costs per Available Seat Mile
(CASM)
Our operating costs per ASM are summarized
below:
Years Ended December 31
2009 2008
%
Change
Total operating expenses per
ASM (CASM) ........... 18.64¢ 21.42¢ (13.0)
CASM includes the following
components: ...........
Fuel costs per ASM ...... 3.31¢ 6.53¢ (49.3)
CRJ-700 fleet transition
costs per ASM ........ —0.37¢ NM
CASM, excluding fuel and
noted items ............ 15.33¢ 14.52¢ 5.5
Q200 fleet transition costs
perASM............. 0.27¢ 0.28¢ NM
NM = Not meaningful
We currently forecast our costs per ASM
excluding fuel and other special items for the
first quarter and full year of 2010 to be down 1%
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ŠForm 10-K