Alaska Air Group reports a record 13% return on invested capital (ROIC) during 2012, surpassing its goal of 10% for the third year in a row.
The Seattle-based carrier generated these returns as it continued to focus on productivity improvements while increasing passenger unit revenue while decreasing non-fuel unit costs, says Brad Tilden, president and chief executive of Alaska, during an earnings call on 24 January.
He says productivity was up 3.5% in 2012 compared to a year earlier, while cost per available seat mile (CASM) excluding fuel was down 1%.
Passenger revenue per available seat mile (PRASM) was up 2.5% for the year, says the airline.
"2012 was a good year for Alaska Air Group," says Tilden.
In addition to the efficiency gains, Alaska reported an 8% increase to $4.7 billion in operating revenue on a 7% increase to $4.3 billion in operating expenses during the year. Operating income rose 18% to $532 million.
Traffic was up 7.9% on a 6.1% increase in capacity.
"Our financial results reflect their efforts along with the structural changes we have made over the last decade such as moving to a single fleet of efficient airplanes of both companies [Alaska and its regional subsidiary Horizon Air], better matching capacity with demand, reducing our costs and more efficiently using the capital in our business," says Brandon Pedersen, chief financial officer of Alaska, during the call.