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About Alaska Air Group, Inc

Alaska Air Group operates through subsidiaries Alaska Airlines, Horizon Air, and Virgin America. The fifth-largest airline in the US, Alaska flies more than 44 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 around three-quarters 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 some 50 Bombardier Q400 turboprops. Alaska Air Group in late 2016 achieved growth through the purchase of Virgin America for $2.6 billion.

Operations

Alaska Air generates 85% of its sales from passenger fares. Its passenger segment comprises Alaska Mainline, its longer-haul operation with flight lengths averaging more than 1,200 miles; and Alaska Regional, offers shorter flights operated by Horizon, SkyWest, and PenAir. Mainline accounts for some 85% of passenger ticket revenue. The Horizon airline sells all of its capacity to Alaska under a capacity purchase agreement. In a given year, Mainline operations carry 35 million paying customers while regional operations, which includes Horizon, transport around 9 million paying customers, mainly in Washington, Oregon, Idaho, and California. The passenger segment also generates non-ticket revenue as reservations fees, ticket change fees, and charges for baggage service.

Freight and mail account for 2% of revenue. Other activities, which together account for 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, Costa Rica, Cuba, 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. The travel agencies use global distribution systems to obtain fare and inventory data from airlines and reservation call centers, located in Phoenix; Kent, Washington; and Boise, Idaho.

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.

Financial Performance

Alaska Air's revenue has achieved lift-off in recent years as it adds new routes and planes and reconfigures seating plans.

In fiscal 2017, the acquisition of Virgin America took revenue to new heights, climbing 34% to $7.9 billion. The company also grew organically, adding 44 new markets and took delivery of 10 Embraer E175 regional jets. Passenger numbers grew 9.7 million to 44.0 million in 2017.

Net income increased 27% to $1.0 billion as tax benefits bestowed by the US Tax Cuts and Jobs Act lowered the effective tax rate to 14.3%. Tax gains were offset by a notable increase in operating expenses relating to higher wages, a 21% rise in fuel costs, and integration expenses, meaning that despite the significant revenue increase, operating profit was down.

Cash inflow from operations increased 14% to $1.6 billion due mostly to higher net income.

Strategy

Alaska Air is primarily focused on the successful integration of Virgin America into its own operations. In 2017 it merged back-office functions, kicked off station co-locations, and launched an interface that allows front-line employees to bounce between Alaska Air and Virgin America applications. In 2018, after it attained a single operating certificate from the Federal Aviation Administration, the company brought Virgin America under the Alaska Air brand, although Virgin livery will remain in place for several months while the company undertakes re-painting.

The company continues to find ways to improve the inflight experience. Recent developments have included in-flight WiFi, menu upgrades, and lounge expansion at JFK and Seattle airports.

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 combined company replaced JetBlue as the fifth-largest US airline by traffic.

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.

Alaska Air Group, Inc

19300 INTERNATIONAL BLVD
Seatac, WA 98188-5304
Phone: 1 (206) 392-5040

Stats

Employer Type: Publicly Owned
Stock Symbol: ALK
Stock Exchange: , NYSE
President and COO, Alaska Airlines: Benito Minicucci
Chairman, President and CEO, Alaska Air Group, Inc., Chairman and CEO, Alaska Airlines, Inc., and Chairman, Virgin America and Horizon Air Industries, Inc.: Bradley D. Tilden
COO, Horizon Air Industries, Inc.: Constance Von Muehlen
Employees (This Location): 107
Employees (All Locations): 23,376

Major Office Locations

Seatac, WA

Other Locations

Anchorage, AK
Bethel, AK
Cordova, AK
Fairbanks, AK
Gustavus, AK
Juneau, AK
Ketchikan, AK
King Salmon, AK
Kodiak, AK
Petersburg, AK
Prudhoe Bay, AK
Sitka, AK
Wrangell, AK
Yakutat, AK
Phoenix, AZ
Burbank, CA
Costa Mesa, CA
Fresno, 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
Honolulu, HI
Kailua Kona, HI
Hailey, ID
Lewiston, ID
Chicago, IL
Indianapolis, IN
Boston, MA
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
Eugene, OR
Medford, OR
Portland, OR
Redmond, OR
Nashville, TN
Austin, TX
Humble, TX
San Antonio, TX
Salt Lake City, UT
Bellingham, WA
East Wenatchee, WA
Kent, WA
Pullman, WA
Seatac, WA
Spokane, WA
Walla Walla, WA
Yakima, WA
Edmonton, Canada
Kelowna, Canada
Sidney, Canada
San Jose Del Cabo, Mexico