SEATTLE-
'While recovery in our industry is never linear, our caring and dedicated people and the strength of our competitive advantages position us for success no matter what challenges we face,' said CEO
Alaska's fourth quarter and full year 2021 results reflect a disciplined focus on cost management and a measured approach to bringing back capacity in recovery. In addition to delivering profitability in the second half of the year, Alaska's financial performance enabled the company to restore its debt-to-capitalization ratio to pre-pandemic levels in the fourth quarter, priming the airlines for profitable growth in 2022.
Financial Results for the Fourth Quarter and Full Year:
Reported net income for the fourth quarter and full year 2021 under Generally Accepted Accounting Principles (GAAP) of
Reported net income for the fourth quarter and net loss for the full year 2021, excluding special items and mark-to-market fuel hedge accounting adjustments, of
Reported adjusted pre-tax margin for the fourth quarter of 2021 of 2.4%, marking the second profitable quarter on an adjusted basis since the onset of the pandemic.
Recorded
Balance Sheet and Liquidity at Year End:
Reported a debt-to-capitalization ratio of 49%, a reduction of 12 points from
For the full year, generated
Repaid
Held
Operational Updates and Milestones for the Fourth Quarter:
Announced nonstop service between
Expanded oneworld partnership with new
Launched new MVP Gold 100k tier for Mileage Plan members, providing enhanced benefits for those traveling 100,000 miles or more in one year.
Named the safest
Received four 737-9 aircraft during the quarter, bringing total additions in 2021 to 11.
Began nonstop service to
Fourth Quarter Environmental, Social, and Governance Updates:
Announced the appointment of
Announced collaboration with ZeroAvia to begin development on a hydrogen-electric powertrain engine capable of flying regional aircraft in excess of 500 nautical miles.
Expanded inflight sustainability efforts by trading plastic water bottles and cups for Boxed Water Is Better plant-based cartons and recyclable paper cups. This change will eliminate an estimated 1.8 million pounds of single-use plastics over the next year.
Launched partnership with travel2change, a
The following table reconciles the company's reported GAAP net income (loss) per share (EPS) for the three and twelve months ended
Three Months Ended December 31, 2021 2020
(in millions, except per share amounts) Dollars Diluted EPS Dollars EPS
Reported GAAP net income (loss) and diluted EPS$ 18 $ 0.14 $ (447) $ (3.60)
Payroll support program wage offset - - (22) (0.18)
Mark-to-market fuel hedge adjustments 21 0.16 (8) (0.06)
Special items - impairment charges and other (6) (0.05) 277 2.23
Special items - restructuring charges 2 0.02 (102) (0.82)
Special items - merger-related costs - - 1 0.01
Special items - net non-operating - - 26 0.21
Income tax effect on special items and fuel hedge adjustments (4) (0.03) (41) (0.33)
Non-GAAP adjusted net income (loss) and diluted EPS$ 31 $ 0.24 $ (316) $ (2.54)
Twelve Months EndedDecember 31, 2021 2020
(in millions, except per share amounts) Dollars Diluted EPS Dollars EPS
Reported GAAP net income (loss) and diluted EPS$ 478 $ 3.77 $ (1,324) $ (10.72)
Payroll support program wage offset (914) (7.21) (782) (6.33)
Mark-to-market fuel hedge adjustments (47) (0.37) (8) (0.06)
Special items - impairment charges and other (1) (0.01) 627 5.08
Special items - restructuring charges (10) (0.08) 220 1.78
Special items - merger-related costs - - 6 0.05
Special items - net non-operating - - 26 0.21
Income tax effect on special items and fuel hedge adjustments 238 1.87 (21) (0.18)
Non-GAAP adjusted net loss and diluted EPS$ (256) $ (2.03) $ (1,256) $ (10.17)
Statistical data, as well as a reconciliation of the reported non-GAAP financial measures, can be found in the accompanying tables. A glossary of financial terms can be found on the last page of this release.
A conference call regarding the fourth quarter and full year results will be streamed online at
References in this update to 'Air Group,' 'Company,' 'we,' 'us,' and 'our' refer to
This news release may contain forward-looking statements subject to the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These statements relate to future events and involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different from those indicated by any forward-looking statements. For a comprehensive discussion of potential risk factors, see Item 1A of the Company's Annual Report on Form 10-K for the year ended
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
See full release at: https://newsroom.alaskaair.com/2022-01-27-Alaska-Air-Group-delivers-strong-fourth-quarter-2021-and-full-year-results
Note A: Pursuant to Regulation G, we are providing reconciliations of reported non-GAAP financial measures to their most directly comparable financial measures reported on a GAAP basis. We believe that consideration of these non-GAAP financial measures may be important to investors for the following reasons:
By eliminating fuel expense and certain special items (including the payroll support program wage offset, impairment and restructuring charges and merger-related costs) from our unit metrics, we believe that we have better visibility into the results of operations as we focus on cost-reduction initiatives emerging from the COVID-19 pandemic. Our industry is highly competitive and is characterized by high fixed costs, so even a small reduction in non-fuel operating costs can result in a significant improvement in operating results. In addition, we believe that all domestic carriers are similarly impacted by changes in jet fuel costs over the long run, so it is important for management (and thus investors) to understand the impact of (and trends in) company-specific cost drivers such as labor rates and productivity, airport costs, maintenance costs, etc., which are more controllable by management.
Cost per ASM (CASM) excluding fuel and certain special items, such as the payroll support program wage offset, impairment and restructuring charges and merger-related costs, is one of the most important measures used by management and by the Air Group Board of Directors in assessing quarterly and annual cost performance.
Adjusted income before income tax (and other items as specified in our plan documents) is an important metric for the employee incentive plan, which covers the majority of
CASM excluding fuel and certain special items is a measure commonly used by industry analysts, and we believe it is the basis by which they have historically compared our airline to others in the industry. The measure is also the subject of frequent questions from investors.
Disclosure of the individual impact of certain noted items provides investors the ability to measure and monitor performance both with and without these special items. We believe that disclosing the impact of these items as noted above. Industry analysts and investors consistently measure our performance without these items for better comparability between periods and among other airlines.
Although we disclose our passenger unit revenues, we do not (nor are we able to) evaluate unit revenues excluding the impact that changes in fuel costs have had on ticket prices. Fuel expense represents a large percentage of our total operating expenses. Fluctuations in fuel prices often drive changes in unit revenues in the mid-to-long term. Although we believe it is useful to evaluate non-fuel unit costs for the reasons noted above, we would caution readers of these financial statements not to place undue reliance on unit costs excluding fuel as a measure or predictor of future profitability because of the significant impact of fuel costs on our business.
GLOSSARY OF TERMS
Adjusted net debt - long-term debt, including current portion, plus capitalized operating leases, less cash and marketable securities
Adjusted net debt to EBITDAR - represents net adjusted debt divided by EBITDAR (trailing twelve months earnings before interest, taxes, depreciation, amortization, special items and rent)
Aircraft Utilization - block hours per day; this represents the average number of hours per day our aircraft are in transit
Aircraft Stage Length - represents the average miles flown per aircraft departure
ASMs - available seat miles, or 'capacity'; represents total seats available across the fleet multiplied by the number of miles flown
CASM - operating costs per ASM, or 'unit cost'; represents all operating expenses including fuel and special items
CASMex - operating costs excluding fuel and special items per ASM; this metric is used to help track progress toward reduction of non-fuel operating costs since fuel is largely out of our control
Debt-to-capitalization ratio - represents adjusted debt (long-term debt plus capitalized operating lease liabilities) divided by total equity plus adjusted debt
Diluted Earnings per Share - represents earnings per share (EPS) using fully diluted shares outstanding
Diluted Shares - represents the total number of shares that would be outstanding if all possible sources of conversion, such as stock options, were exercised
Economic Fuel - best estimate of the cash cost of fuel, net of the impact of our fuel-hedging program
Load Factor - RPMs as a percentage of ASMs; represents the number of available seats that were filled with paying passengers
Mainline - represents flying
Productivity - number of revenue passengers per full-time equivalent employee
RASM - operating revenue per ASMs, or 'unit revenue'; operating revenue includes all passenger revenue, freight & mail, Mileage Plan and other ancillary revenue; represents the average total revenue for flying one seat one mile
Regional - represents capacity purchased by
RPMs - revenue passenger miles, or 'traffic'; represents the number of seats that were filled with paying passengers; one passenger traveling one mile is one RPM
Yield - passenger revenue per RPM; represents the average revenue for flying one passenger one mile
SOURCE
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