Alaska Air Group's board of directors has approved a stock repurchase programme authorising the company to buy up to $250 million of its common stock.
The programme does not have an expiration date, however, the Group is targeting completion by 31 December 2014. The company intends to finance the stock repurchases with cash on hand.
"This $250 million repurchase authorization by our board is the largest program we have ever announced, representing over 10 percent of the current market capitalization of our company. This action emphasizes our continued commitment to build long-term shareholder value and highlights our confidence in the future of Alaska Air Group," President and CEO Brad Tilden said.
Alaska Air Group also announced that it will complete its previous $50 million buyback programme, which was announced in February this year.
Since 2007 Alaska Air Group has repurchased 18.1 million shares of its common stock, on a split-adjusted basis, for $312 million through similar programmes.
The Seattle-based carrier had $1.2 billion in cash and short-term investments at 30 June 2012, which was up 9% from the $1.1 billion at the end of March. It had $1.2 billion in cash and short-term investments at the end of the second quarter of 2011.
During the second quarter, Alaska used $165 million of free cash flow to pay off its long-term debt and to repurchase stocks. Alaska had $957.1 million in long-term debt at the end of the quarter, which was down 4.3% from $1 billion at the end of the first quarter. It had $1.2 billion in debt at the end of June 2011.