About Alaska Air Group, Inc

Alaska Air Group operates through subsidiaries Alaska Airlines, Horizon Air, and Virgin America. It flies more than 40 million passengers to more than 120 destinations with an average of 1,200 daily flights in the US (mainly western states including Alaska and Hawaii), Canada, and Mexico. The group's primary hub is Seattle (accounting for almost two-thirds of passengers), but it also flies out of key markets such as Portland, Oregon; Los Angeles; and Anchorage, Alaska. Alaska Airlines has a fleet of about 155 Boeing 737 jets. Horizon Air operates more than 50 Bombardier Q400 turboprops. Alaska Air Group in late 2016 achieved growth through the purchase of Virgin America for $2.6 billion.

Operations

Accounting for 85% of revenue, the passenger segment's Alaska line is divided into Alaska Mainline (78%), which makes flights with average stage lengths that are more than 1,200 miles, and Alaska Regional (15%), for shorter distances. Airline Horizon sells all of its capacity to Alaska under a capacity purchase agreement. In a given year, Mainline operations carry 25 million revenue passengers while regional operations, which includes Horizon, transport more than 9 million revenue passengers, mainly in Washington, Oregon, Idaho, and California.

Newly acquired Virgin America competes as a low-fare carrier and attempts to separate itself from rivals by providing first-class service and an assortment of in-flight entertainment options. Combined, Alaska Air and Virgin America offer almost 290 daily flights to 52 destinations from California, including 113 daily nonstop flights to 32 destinations from three Bay Area airports and more than 100 daily nonstop flights to 37 destinations from four Los Angeles area airports.

As its name implies, Alaska Air Group transports more passengers between Alaska and the US mainland than any other airline. Besides its own flights, the passenger segment provides passenger service through contracts with SkyWest Airlines and Peninsula Airways. Carrying about 4% of all US domestic passenger traffic, the segment also includes such non-ticket revenue as reservations fees, ticket change fees, and charges for baggage service.

Freight and mail account for 2% of revenue. The Other segment, around 15% of revenue, includes the Mileage Plan, on-board food and beverages, commissions from car and hotel vendors, and travel insurance. The Mileage Plan awards miles for flights on Alaska, Horizon, and partner airlines and sells miles to third parties.

Geographic Reach

Alaska Air Group serves more than 120 cities through an expansive network in Alaska, the contiguous 48 states, Hawaii, Canada, and Mexico. The company leases operations, training, and aircraft maintenance facilities in Portland and Spokane, as well as line maintenance stations in Boise, Bellingham, Eugene, San Jose, Medford, Redmond, Seattle, and Spokane. It also leases call center facilities in Phoenix and Boise.

Sales and Marketing

Alaska Air's airline tickets are distributed through the airline's website and through traditional and online travel agencies that use global distribution systems to obtain their fare and inventory data from airlines and reservation call centers located in Phoenix; Kent, Washington; and Boise, Idaho.

The company has increased its investment in advertising year-over-year; in 2016, the company spent $61 million on advertising, compared to $55 million in 2015.

Financial Performance

Alaska Air has achieved unprecedented growth over the years, with revenues rising 6% to peak at a record-setting $5.9 billion in 2016. The historic growth was fueled by a 6% increase in mainline passenger capacity by new routes, the addition of seats to the existing fleet, and the delivery of 10 737-900ERs.

Alaska Air also experienced a 17% spike in sales from its Other segment in 2016. This was fueled by a 30% bump in Mileage Plan sales due to increased miles sold and improved compensation terms with its Mileage Plan affinity credit card partner.

The company's net income, however, declined 4% from $848 million in 2015 to $814 million in 2016 mainly due to the addition of merger-related costs. In addition, its operating cash flow declined from $1.58 billion to 2015 to $1.39 billion in 2016.

Strategy

Alaska Air is primarily focused on the successful integration of Virgin America into its own operations. The company has stated that the merger with Virgin America should be completed during 2017 to 2019, and that it's likely 2019 is when the company would enjoy a full annual efficiency benefit.

Mergers and Acquisitions

In a noteworthy move within the US airline industry, Alaska Air Group in late 2016 acquired Virgin America for $2.6 billion. The company expects the deal to boost its annual revenue by 27% and to add to its earnings within the transaction's first year. The combination also created the fifth-largest US airline by traffic, replacing JetBlue, which formerly held that spot.

The Virgin America acquisition helped Alaska Air Group to better serve West Coast travelers. Virgin America also provides a platform for Alaska Air's low-fare growth as well as enhanced international partnerships. Additionally, the deal provides an opportunity to grow and improve the company's loyalty program while gaining access to constrained gates, particularly on the East Coast.

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Alaska Air Group, Inc

19300 International Blvd
Seatac, WA 98188-5304
Phone: 1 (206) 392-5040
Fax: 1 (206) 431-5007

Stats

  • Employer Type: Public
  • Stock Symbol: ALK
  • Stock Exchange: NYSE
  • Chairman and CEO, Alaska Air Group, Alaska Airlines, and Horizon Air: Bradley D. Tilden
  • EVP Finance and CFO: Brandon S. Pedersen
  • Chairman and CEO, Alaska Air Group, Alaska Airlines, and Horizon Air: Bradley D. Tilden
  • 2016 Employees: 19,112

Major Office Locations

  • Seatac, WA
  • Seattle, WA

Other Locations

  • Adak, AK
  • Anchorage, AK
  • Barrow, AK
  • Bethel, AK
  • Cordova, AK
  • Dutch Harbor, AK
  • Fairbanks, AK
  • Gustavus, AK
  • Juneau, AK
  • Ketchikan, AK
  • King Salmon, AK
  • Kodiak, AK
  • Kotzebue, AK
  • Petersburg, AK
  • Prudhoe Bay, AK
  • Sitka, AK
  • Unalaska, AK
  • Wrangell, AK
  • Yakutat, AK
  • Phoenix, AZ
  • Tucson, AZ
  • Burbank, CA
  • Costa Mesa, CA
  • Fresno, CA
  • Goleta, CA
  • Los Angeles, CA
  • Oakland, CA
  • Ontario, CA
  • Palm Springs, CA
  • Sacramento, CA
  • San Diego, CA
  • San Jose, CA
  • Denver, CO
  • Washington, DC
  • Fort Lauderdale, FL
  • Tampa, FL
  • Atlanta, GA
  • Honolulu, HI
  • Kahului, HI
  • Kailua Kona, HI
  • Lihue, HI
  • Boise, ID
  • Hailey, ID
  • Lewiston, ID
  • Pocatello, ID
  • Chicago, IL
  • Indianapolis, IN
  • Kenner, LA
  • Boston, MA
  • Baltimore, MD
  • Romulus, MI
  • Minneapolis, MN
  • Kansas City, MO
  • Saint Louis, MO
  • Belgrade, MT
  • Billings, MT
  • Helena, MT
  • Kalispell, MT
  • Morrisville, NC
  • Newark, NJ
  • Las Vegas, NV
  • Reno, NV
  • Jamaica, NY
  • Eugene, OR
  • Medford, OR
  • Portland, OR
  • Redmond, OR
  • Philadelphia, PA
  • Nashville, TN
  • Austin, TX
  • Grapevine, TX
  • Humble, TX
  • San Antonio, TX
  • Salt Lake City, UT
  • Bellingham, WA
  • East Wenatchee, WA
  • Kent, WA
  • Pullman, WA
  • Spokane, WA
  • Walla Walla, WA
  • Yakima, WA
  • Edmonton, Canada
  • Kelowna, Canada
  • Sidney, Canada
  • Ciudad De Mexico, Mexico
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