<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1999.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------- -------------
Commission file number 1-8957
ALASKA AIRLINES, INC.
(Exact name of registrant as specified in its charter)
Alaska 92-0009235
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
19300 Pacific Highway South, Seattle, Washington 98188
(Address of principal executive offices)
Registrant's telephone number, including area code: (206) 431-7079
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
The registrant has 500 common shares, par value $1.00, outstanding at March
31, 1999.
1
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Attached are the following Alaska Airlines, Inc. (the Company or Alaska)
unaudited financial statements: (i) balance sheets as of March 31, 1999 and
December 31, 1998; (ii) statements of income for the three months ended March
31, 1999 and 1998; (iii) statement of shareholder's equity for the three months
ended March 31, 1999; and, (iv) statements of cash flows for the three months
ended March 31, 1999 and 1998. These statements, which should be read in
conjunction with the financial statements in the Company's annual report on Form
10-K for the year ended December 31, 1999, include all adjustments that are, in
the opinion of management, necessary for a fair presentation of the results for
the interim periods. The adjustments made were of a normal recurring nature.
The Company is a wholly owned subsidiary of Alaska Air Group, Inc. (Air Group)
whose principal subsidiaries are Alaska Airlines, Inc. and Horizon Air
Industries, Inc.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS
FIRST QUARTER 1999 COMPARED WITH FIRST QUARTER 1998
Net income for the first quarter of 1999 was $18.7 million compared with a net
income of $14.6 million in 1998. Operating income for the first quarter of 1998
was $26.1 million compared with $22.5 million for 1998. Financial and
statistical data is shown following the financial statements. A discussion of
this data follows.
REVENUES
Capacity grew by 8.4%, primarily due to above average growth in the Southern
California, Arizona and Mexico markets. Traffic grew by 9.9%, resulting in
almost a one point increase in passenger load factor. The Mexico, Canada and
Northern California markets experienced increases in load factor, while the
Seattle-Anchorage and Southeast Alaska markets experienced decreases. Lower
passenger yields in the Seattle-Anchorage, Arizona and Mexico markets
contributed to an overall 1.6% decrease in yield. The higher load factor
combined with the lower yield resulted in an essentially flat revenue per
available seat mile (ASM). Consequently, passenger revenues increased 8.1%,
essentially in line with the 8.4% increase in capacity.
Freight and mail revenues decreased 2.2%, primarily due to lower mail volumes.
Other-net revenues increased 18.9%, primarily due to increased revenue from
travel partners in Alaska's frequent flyer program and increased aircraft
maintenance services performed for other companies.
EXPENSES
Operating expenses grew by 7.5% as a result of an 8.4% increase in capacity and
a 0.8% decrease in cost per ASM. The decrease in cost per ASM was largely due to
lower fuel prices in 1999. Without the lower fuel prices, cost per ASM would
have increased 1%. Explanations for year-over-year changes in the components of
operating expenses are as follows:
o Wages and benefits increased 8.2% due to a 6.4% increase in the number
of employees, combined with a 1.7% increase in average wages and
benefits per employee. Employees
2
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were added in all areas to service the 8.4% capacity (ASM) increase
and the 7.3% increase in passengers carried.
o Contracted services increased 13%, exceeding the 8% increase in
capacity, due to greater use of temporary employees (particularly in
computer systems development), higher facility repair costs incurred
and increased navigation fees in Canada and Mexico.
o Fuel expense decreased 10%, as the 8% increase in fuel consumption was
more than offset by a 16% decrease in the price of fuel.
o Maintenance expense increased 26%, exceeding the 7% increase in block
hours, due to increased engine overhaul expense.
o Aircraft rent increased 9%, primarily due to leasing six more aircraft
in 1999.
o Food and beverage expense increased 7%, in line with the 7% increase
in passengers carried.
o Commission expense increased 2% on an 8% increase in passenger
revenue. As a percentage of passenger revenue, commission expense
decreased 6%, from 7.0% to 6.6%. In 1999, 69% of ticket sales were
made through travel agents, versus 72% in 1998.
o Other selling expenses increased 13%, higher than the 8% increase in
passenger revenues, primarily due to increased credit card sales and
related commission rates.
o Landing fees and other rentals increased 26%, higher than the 8%
increase in capacity, due to a retroactive adjustment at Seattle and
rate increases at Seattle and several other airports.
o Other expense increased 2%, lower than the 8% increase in capacity,
primarily due to lower insurance rates and reduced legal expenses.
NONOPERATING INCOME (EXPENSE) Net nonoperating items improved $3.1 million over
1998, primarily due to lower interest expense (due to lower debt balances and
lower interest rates on variable debt), higher interest income (due to higher
cash balances) and a gain on sale of an industry ticket distribution system.
3
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LIQUIDITY AND CAPITAL RESOURCES
The table below presents the major indicators of financial condition and
liquidity.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
December 31, 1998 MARCH 31, 1999 CHANGE
- -----------------------------------------------------------------------------------------------------------
(In millions, except debt-to-equity)
<S> <C> <C> <C>
Cash and marketable securities $ 306.3 $ 288.9 $ (17.4)
Working capital (deficit) (85.7) (117.5) (31.8)
Long-term debt and
capital lease obligations 171.5 165.0 (6.5)
Shareholders' equity 549.5 568.2 18.7
Debt-to-equity 24%:76% 23%:77% NA
- -----------------------------------------------------------------------------------------------------------
</TABLE>
The Company's cash and marketable securities portfolio decreased by $17 million
during the first three months of 1999. Operating activities provided $73 million
of cash during this period. Cash was used for $87 million of capital
expenditures, including the purchase of two new B737-400 aircraft, flight
equipment deposits and airframe and engine overhauls and the repayment of debt
($6 million).
COMMITMENTS At March 31, 1999, the Company had firm orders for 21 aircraft with
a total cost of approximately $754 million, as set forth below.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
DELIVERY PERIOD - FIRM ORDERS
- -------------------------------------------------------------------------------------------------
AIRCRAFT 1999 2000 2001 2002 TOTAL
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Boeing B737-400 1 -- -- -- 1
Boeing B737-700 6 6 -- -- 12
Boeing B737-900 -- -- 5 5 10
- -------------------------------------------------------------------------------------------------
Total 7 6 5 5 23
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
Cost (Millions) $218 $186 $175 $175 $754
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
YEAR 2000 COMPUTER ISSUE The Company uses a significant number of computer
software programs and embedded operating systems that were not originally
designed to process dates beyond 1999. The Company has implemented a project to
ensure that the Companyis systems will function properly in the year 2000 and
thereafter. The Company's Y2K project comprises five phases for each affected
system: inventory, assessment, remediation, testing and implementation. The
inventory and assessment phases are complete. As of March 31, 1999 the Company
has completed remediation of more than 85% of its high-priority systems. By the
end of June 1999 the Company expects to substantially complete all phases of the
project for all systems. The Company believes that, with modifications to its
existing software and systems and/or conversions to new software, the year 2000
issue will not pose significant operational problems. Most of the Company's
information technology projects in the last several years have made the affected
systems year 2000 compliant. The direct costs of projects solely intended to
correct year 2000 problems are currently estimated at less than $2 million. The
Company does not track certain costs attributable to year 2000, such as salaries
of information technology staff not dedicated entirely to the project.
Additional systems currently under review may require further resources. The
Company does not expect any cost increases to have a material effect on its
results of operations.
4
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The Company is also in contact with its significant suppliers and vendors with
which its systems interface and exchange data or upon which its business
depends. These efforts are designed to minimize the extent to which its business
will be vulnerable to their failure to remediate their own year 2000 issues. The
Companyis business is also dependent upon certain governmental organizations or
entities such as the Federal Aviation Administration (FAA) that provide
essential aviation industry infrastructure. The Company is working with the
Airline Transport Association (ATA) and the International Airline Transport
Association (IATA) to monitor the progress of FAA and airports in making their
systems year 2000 compliant. In addition, the Company is independently working
with certain rural Alaska airports not within ATA's purview. There can be no
assurance that such third parties on which the Companyis business relies will
successfully remediate their systems on a timely basis. The Companyis business,
financial condition or results of operations could be materially adversely
affected by the failure of its systems or those operated by other parties to
operate properly beyond 1999. Areas that could be adversely affected include
flight operations, maintenance, planning, reservations, sales, accounting and
the frequent flyer program.
The Company already has in place certain disaster contingency plans anticipating
the potential loss of essential services such as electricity and financial
accounting systems. The Company will leverage its year 2000 contingency planning
off these existing plans. In addition, the Company is developing and executing
additional contingency plans designed to allow continued operation in the event
of failure of key internal and third party systems or products. This planning
involves (a) making a list of critical operations processes, (b) assessing the
effect of their failure on safety, operations and revenue, (c) quantifying the
risk of failure of each, and (d) based on the foregoing, developing a discrete
contingency plan for each potential failure. The Company expects to complete its
contingency planning during the third and fourth quarters of 1999. The foregoing
Year 2000 Computer Issue comments include forward-looking statements regarding
the performance of the Company. Actual results may differ materially from these
projections. Factors that could cause results to differ include the availability
of adequate resources to complete the Companyis year 2000 plan, the ability to
identify and remediate noncompliant systems, and the success of third parties in
remediating their year 2000 issues.
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
EMPLOYEES
During the first quarter of 1999, Alaska and the Association of Flight
Attendants began negotiation of a new labor contract covering approximately
1,700 flight attendants. Alaska and the International Association of Machinists
(IAM) are continuing negotiation of a new contract (covering approximately 1,000
rampservice and stock clerk employees) with the assistance of a federal
mediator. Alaska and the IAM are also continuing negotiation of a new contract
covering approximately 3,200 clerical, office and passenger service employees.
Alaska and the Aircraft Mechanics Fraternal Association (AMFA) are continuing
negotiation of an initial contract covering approximately 1,100 mechanics,
inspectors and cleaners.
5
<PAGE>
ALLIANCES WITH OTHER AIRLINES
Alaska and Horizon have announced a number of new marketing alliances with other
airlines that allow reciprocal frequent flyer mileage accrual and redemption
privileges and codesharing on certain flights. The purpose of the alliances is
to enhance Alaska's and Horizon's revenues by (a) providing our customers more
value by offering them more travel destinations and better accrual/redemption
opportunities, and (b) gaining access to more connecting traffic from other
airlines. The following table shows which of these relationships are existing as
of December 31, 1998 (Existing), which are new (New) and which are planned later
in 1999 (Planned).
<TABLE>
<CAPTION>
CODESHARING-- CODESHARING--
FREQUENT ALASKA FLIGHT # OTHER AIRLINE FLIGHT #
FLYER ON FLIGHTS OPERATED ON FLIGHTS OPERATED
AGREEMENT BY OTHER AIRLINES BY ALASKA/HORIZON
--------- ------------------- ----------------------
<S> <C> <C> <C>
MAJOR U.S. OR
INTERNATIONAL AIRLINES
- ----------------------
American Airlines New Planned None
British Airways Existing None None
Canadian Airlines New New New
Continental Airlines New New New
KLM Existing None Existing
Northwest Airlines Existing Existing Existing
Qantas Existing None New
TWA Existing None None
COMMUTER AIRLINES
- -----------------
American Eagle Existing* Existing None
Era Aviation Existing* Existing None
Harbor Airlines Existing* Existing None
Trans States Airlines Existing* Existing None
PenAir Existing* Existing None
Reeve Aleutian Airways Existing* Existing None
</TABLE>
* This airline does not have its own frequent flyer program. However, Alaska's
Mileage Plan members can accrue and redeem miles on this airline's route system.
6
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27 - Financial data schedule.
(b) No reports on Form 8-K were filed during the first quarter of 1999.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
ALASKA AIRLINES, INC.
- ---------------------------------------
Registrant
Date: April 28, 1998
/s/ John F. Kelly
- ---------------------------------------
John F. Kelly
Chairman and Chief Executive Officer
/s/ Harry G. Lehr
- ---------------------------------------
Harry G. Lehr
Senior Vice President/Finance
(Principal Financial Officer)
7
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BALANCE SHEET
Alaska Airlines, Inc.
<TABLE>
<CAPTION>
ASSETS
- ---------------------------------------------------------------------- ------------
December 31, MARCH 31,
(In Millions) 1998 1999
- ---------------------------------------------------------------------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $29.1 $60.6
Marketable securities 277.2 228.3
Receivables from related companies 7.0 22.8
Receivables - net 66.0 85.4
Inventories and supplies 23.9 23.7
Prepaid expenses and other assets 103.5 104.0
- ---------------------------------------------------------------------- ------------
TOTAL CURRENT ASSETS 506.7 524.8
- ---------------------------------------------------------------------- ------------
PROPERTY AND EQUIPMENT
Flight equipment 926.0 995.6
Other property and equipment 243.2 255.1
Deposits for future flight equipment 130.4 126.1
- ---------------------------------------------------------------------- ------------
1,299.6 1,376.8
Less accumulated depreciation and amortization 364.1 376.8
- ---------------------------------------------------------------------- ------------
935.5 1,000.0
- ---------------------------------------------------------------------- ------------
Capital leases:
Flight and other equipment 44.4 44.4
Less accumulated amortization 29.6 30.2
- ---------------------------------------------------------------------- ------------
14.8 14.2
- ---------------------------------------------------------------------- ------------
TOTAL PROPERTY AND EQUIPMENT - NET 950.3 1,014.2
- ---------------------------------------------------------------------- ------------
INTANGIBLE ASSETS - SUBSIDIARIES 14.0 13.9
- ---------------------------------------------------------------------- ------------
OTHER ASSETS 77.8 73.4
- ---------------------------------------------------------------------- ------------
TOTAL ASSETS $1,548.8 $1,626.3
- ---------------------------------------------------------------------- ------------
- ---------------------------------------------------------------------- ------------
</TABLE>
8
<PAGE>
BALANCE SHEET
Alaska Airlines, Inc.
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDER'S EQUITY
- ---------------------------------------------------------------------- -------------
December 31, MARCH 31,
(In Millions) 1998 1999
- ---------------------------------------------------------------------- -------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $63.8 $65.1
Payables to related companies 104.4 108.7
Accrued aircraft rent 62.1 55.5
Accrued wages, vacation and payroll taxes 68.9 51.6
Other accrued liabilities 88.3 101.0
Air traffic liability 177.7 233.0
Current portion of long-term debt and
capital lease obligations 27.2 27.4
- ---------------------------------------------------------------------- -------------
TOTAL CURRENT LIABILITIES 592.4 642.3
- ---------------------------------------------------------------------- -------------
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS 171.5 165.0
- ---------------------------------------------------------------------- -------------
OTHER LIABILITIES AND CREDITS
Deferred income taxes 98.2 110.3
Deferred income 38.1 37.1
Other liabilities 99.1 103.4
- ---------------------------------------------------------------------- -------------
235.4 250.8
- ---------------------------------------------------------------------- -------------
SHAREHOLDER'S EQUITY 0.0 0.0
Common stock, $1 par value 0.0 0.0
Authorized: 1,000 shares
Issued: 1998 and 1999 - 500 shares - -
Capital in excess of par value 225.8 225.8
Retained earnings 323.7 342.4
- ---------------------------------------------------------------------- -------------
549.5 568.2
- ---------------------------------------------------------------------- -------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $1,548.8 $1,626.3
- ---------------------------------------------------------------------- -------------
- ---------------------------------------------------------------------- -------------
</TABLE>
9
<PAGE>
STATEMENT OF INCOME
Alaska Airlines, Inc.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------- --------------
Three Months Ended March 31
(In Millions) 1998 1999
- ---------------------------------------------------------------------- --------------
<S> <C> <C>
OPERATING REVENUES
Passenger $309.8 $335.0
Freight and mail 18.4 18.0
Other - net 15.9 18.9
- ---------------------------------------------------------------------- --------------
TOTAL OPERATING REVENUES 344.1 371.9
- ---------------------------------------------------------------------- --------------
OPERATING EXPENSES
Wages and benefits 112.7 122.8
Contracted services 12.0 13.5
Aircraft fuel 39.1 35.4
Aircraft maintenance 18.3 23.0
Aircraft rent 37.2 40.5
Food and beverage service 11.0 11.8
Commissions 21.6 22.1
Other selling expenses 17.2 19.4
Depreciation and amortization 15.1 15.9
Loss on disposition of assets - 0.1
Landing fees and other rentals 13.3 16.7
Other 24.1 24.6
- ---------------------------------------------------------------------- --------------
TOTAL OPERATING EXPENSES 321.6 345.8
- ---------------------------------------------------------------------- --------------
OPERATING INCOME 22.5 26.1
- ---------------------------------------------------------------------- --------------
Nonoperating Income (Expense)
Interest income 4.4 5.2
Interest expense (4.7) (3.8)
Interest capitalized 1.1 1.7
Other - net 0.8 1.6
- ---------------------------------------------------------------------- --------------
1.6 4.7
- ---------------------------------------------------------------------- --------------
Income before income tax 24.1 30.8
Income tax expense 9.5 12.1
- ---------------------------------------------------------------------- --------------
NET INCOME $14.6 $18.7
- ---------------------------------------------------------------------- --------------
- ---------------------------------------------------------------------- --------------
</TABLE>
10
<PAGE>
STATEMENT OF SHAREHOLDER'S EQUITY
Alaska Airlines, Inc.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Capital in
Common Excess of Retained
(In Millions) Stock Par Value Earnings Total
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balances at December 31, 1998 $ -- $225.8 $323.7 $549.5
Net income for the three months
ended March 31, 1999 18.7 18.7
- ------------------------------------------------------------------------------------------------
BALANCES AT MARCH 31, 1999 $ -- $225.8 $342.4 $568.2
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
STATEMENT OF CASH FLOWS
Alaska Airlines, Inc.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------- -----------
Three Months Ended March 31 (In Millions) 1998 1999
- --------------------------------------------------------------------------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $14.6 $18.7
Adjustments to reconcile net income to cash:
Depreciation and amortization 15.1 15.9
Amortization of airframe and engine overhauls 8.0 10.1
Increase in deferred income taxes 8.6 12.1
Increase in accounts receivable (28.1) (35.2)
Decrease (increase) in other current assets 0.9 (0.3)
Increase in air traffic liability 46.9 55.3
Increase (decrease) in other current liabilities 11.1 (5.6)
Other-net (0.2) 1.7
- --------------------------------------------------------------------------- -----------
Net cash provided by operating activities 76.9 72.7
- --------------------------------------------------------------------------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities (84.2) (25.7)
Sales and maturities of marketable securities 20.9 74.6
Restricted deposits (0.4) 2.8
Additions to flight equipment deposits (10.2) (21.8)
Additions to property and equipment (85.3) (64.8)
- --------------------------------------------------------------------------- -----------
Net cash used in investing activities (159.2) (34.9)
- --------------------------------------------------------------------------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale and leaseback transactions 64.0 -
Long-term debt and capital lease payments (6.5) (6.3)
- --------------------------------------------------------------------------- -----------
Net cash provided by (used in) financing activities 57.5 (6.3)
- --------------------------------------------------------------------------- -----------
Net increase (decrease) in cash and cash equivalents (24.8) 31.5
Cash and cash equivalents at beginning of period 102.3 29.1
- --------------------------------------------------------------------------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $77.5 $60.6
- --------------------------------------------------------------------------- -----------
- --------------------------------------------------------------------------- -----------
Supplemental disclosure of cash paid during the period for:
Interest $4.9 $2.9
Income taxes -- 4.2
Noncash investing and financing activities:
1998 - A $54.0 million note payable to Alaska Air Group was exchanged
for a non-interest bearing payable.
</TABLE>
12
<PAGE>
ALASKA AIRLINES FINANCIAL AND STATISTICAL DATA
<TABLE>
<CAPTION>
Quarter Ended March 31
------------------------------------
%
FINANCIAL DATA (IN MILLIONS): 1998 1999 Change
----- ----- ------
<S> <C> <C> <C>
Operating Revenues:
Passenger $309.8 $335.0 8.1
Freight and mail 18.4 18.0 (2.2)
Other - net 15.9 18.9 18.9
-----------------------
Total Operating Revenues 344.1 371.9 8.1
-----------------------
Operating Expenses:
Wages and benefits 110.7 119.8 8.2
Employee profit sharing 2.0 3.0 50.0
Contracted services 12.0 13.5 12.5
Aircraft fuel 39.1 35.4 (9.5)
Aircraft maintenance 18.3 23.0 25.7
Aircraft rent 37.2 40.5 8.9
Food and beverage service 11.0 11.8 7.3
Commissions 21.6 22.1 2.3
Other selling expenses 17.2 19.4 12.8
Depreciation and amortization 15.1 15.9 5.3
Loss on sale of assets 0.0 0.1
Landing fees and other rentals 13.3 16.7 25.6
Other 24.1 24.6 2.1
-----------------------
Total Operating Expenses 321.6 345.8 7.5
-----------------------
Operating Income 22.5 26.1 16.0
-----------------------
Interest income 4.4 5.2
Interest expense (4.7) (3.8)
Interest capitalized 1.1 1.7
Other - net 0.8 1.6
-----------------------
1.6 4.7
-----------------------
Income Before Income Tax $24.1 $30.8 27.8
-----------------------
-----------------------
OPERATING STATISTICS:
Revenue passengers (000) 2,863 3,072 7.3
RPMs (000,000) 2,459 2,701 9.9
ASMs (000,000) 3,798 4,117 8.4
Passenger load factor 64.7% 65.6% 0.9 pts
Breakeven load factor 60.0% 59.9% (0.1)pts
Yield per passenger mile 12.60c 12.40c (1.6)
Operating revenue per ASM 9.06c 9.03c (0.3)
Operating expenses per ASM 8.47c 8.40c (0.8)
Fuel cost per gallon 57.5c 48.5c (15.8)
Fuel gallons (000,000) 67.9 73.1 7.7
Average number of employees 8,353 8,885 6.4
Aircraft utilization (block hours) 11.3 11.1 (1.8)
Operating fleet at period-end 80 86 7.5
c = cents
</TABLE>
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ALASKA
AIRLINES INC. FIRST QUARTER 1999 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 60600
<SECURITIES> 228300
<RECEIVABLES> 108200
<ALLOWANCES> 0
<INVENTORY> 23700
<CURRENT-ASSETS> 524800
<PP&E> 1421200
<DEPRECIATION> 407000
<TOTAL-ASSETS> 1626300
<CURRENT-LIABILITIES> 642300
<BONDS> 165000
0
0
<COMMON> 1
<OTHER-SE> 568199
<TOTAL-LIABILITY-AND-EQUITY> 1626300
<SALES> 371900
<TOTAL-REVENUES> 371900
<CGS> 345800
<TOTAL-COSTS> 345800
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3800
<INCOME-PRETAX> 30800
<INCOME-TAX> 12100
<INCOME-CONTINUING> 18700
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18700
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
