Alaska Air Group Chairman and CEO Bill Ayer credited "sacrifices by our employees, strong revenue performance and the benefits of our fuel hedging program" for the company's improved performance in 2005, which saw the parent of Alaska Airlines and Horizon Air narrow its net loss 61.4% to $5.9 million from a 2004 deficit of $15.3 million.

Excluding the cumulative effect of a maintenance accounting policy change that totaled $90.4 million, the company said it earned $84.5 million last year. Furthermore, both 2004 and 2005 results include a number of special items, both gains and losses. Excluding these, 2005 net income would have been $55 million.

Also during a conference call, Ayer briefly addressed the safety issues that have plagued Alaska Airlines over the past two months, including two ground incidents in which aircraft were damaged on the ramp in Seattle (ATWOnline, Jan. 16). "I want to say unequivocally that safety is our No. 1 priority," he insisted, adding that the carrier is "putting into place a ramp action plan to improve all aspects of our operation."

AAG's operating revenue in 2005 climbed 9.3% to $2.98 billion and expenses rose just 6.4% to $2.98 billion, narrowing operating loss 90.7% to $7.4 million from $79.8 million in 2004. Excluding the impact of restructuring charges from both periods, however, operating loss was virtually flat at $13 million. Fuel costs rose 33.7% to $722.8 million and employee costs fell 4.5%.

Ayer said the company's improving revenue and "balance sheet strength" allowed it to consider the early retirement of 26 MD-80s. It will add 12 737-800s in 2006 and a further 26 aircraft during the following two years. It will retire 20 MD-80s this year. ASMs will increase 5%-6% in 2006.

Alaska Airlines posted an operating loss of $10.8 million, an 87.3% drop from a 2004 loss of $85.4 million, as revenue increased 8.2% to $2.42 billion and expenses rose 4.7% to $2.43 billion. Traffic climbed 4.2% to 16.76 billion RPMs and capacity rose just 0.1% to 22.29 billion ASMs. Yield was ahead 3.5% to 12.91 cents while load factor gained 3 points to 75.9%, pushing RASM up 8.2% to 10.84 cents. "The market is less price-sensitive than it has been in the past," Ayer said. CASM grew 4.6% to 10.89 cents but just 1.1% excluding fuel and special items.

At Horizon, a 10.6% rise in revenue to $556.4 million and an 11.4% climb in expenses to $550.2 million resulted in a $6.2 million operating profit, down 33.3% from $9.3 million in 2004. Traffic rose 14.8%, capacity was up 9.4% and load factor climbed 3.5 points to 72.8%, but yield dropped 2.8% to 21.98 cents. RASM increased 1% to 16.36 cents and CASM climbed 1.8% to 16.18 cents.

For the fourth quarter, AAG lost $33 million, narrowed 26.5% from a $44.9 million loss in the prior year. Excluding special items, it would have earned $0.6 million compared to a loss of $14.3 million in the year-ago period. Operating revenue rose 11.3% to $730.6 million and expenses lifted 6% to $756.4 million, resulting in a $25.8 million operating loss, a 55.1% improvement.