Alaska Air Group reported a net profit of $322 million during the third quarter, compared to $217 million during the same quarter in 2018 as the company continues its aggressive cost management mentality.
The Seattle-based parent company of Alaska Airlines and regional carrier Horizon Air on 24 October reported operating revenue grew by 8% to $2.4 billion, up from $2.2 billion during the third quarter in 2018. Operating expenses during the third quarter totalled $2 billion, up 3% year-on-year from $1.9 billion.
Alaska chief financial officer Brandon Petersen says during a conference call on 24 October that "aggressive cost management" has enabled profitable operations while paying off expenses and debt. Peterson says the airline has capital flexibility for new investments while paying off the acquisition of Virgin America in 2018 because "our balance sheet is rock solid".
Revenue per available seat mile (RASM) grew by 4.5% year-on-year to 13.6 cents during the third quarter. Cost per available seat mile excluding fuel (CASM) nearly offset that by rising to 8.4 cents, 3.4% higher than the same quarter in 2018.
For the full year of 2019, the air group's capacity is forecast to grow by 2%. CASM is forecast to increase 2% for the full year of 2019, according to investor guidance. During the fourth quarter RASM is projected to grow between 1% and 4%.
The airline's routes to Hawaii "performed well", Peterson says, despite heavy weather and volcanic related flight disruptions in the islands.
The air group's performance met expectations for JP Morgan analyst Jamie Baker, who maintains the company at an "overweight" or good value per stock rating.
Alaska Airlines plans for growth that will be less tied with American Airlines. The carrier will shrink its partnership with American and offerings for frequent flyers beginning in March. Most existing passenger mileage points from that partnership will not be impacted. The airline says "we still have a partnership with American" including through airport lounge access and connecting flights through Chicago but "the code share will be very small" in the future.