Alaska Air Group, Inc. (NYSE:ALK) Q4 2014 Earnings Conference Call - Final Transcript

Jan 22, 2015 • 11:30 am ET

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Alaska Air Group, Inc. (NYSE:ALK) Q4 2014 Earnings Conference Call - Final Transcript

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Operator
operator

Good morning. My name is Michele, and I will be your conference operator today. At this time, I would like to welcome everyone to the Alaska Air Group Fourth Quarter and Full year 2014 Earnings Conference Call. Today's call is being recorded and will be accessible for future playback at www.alaskaair.com. (Operator Instructions).

I would now like to turn the call over Alaska Air Group's Managing Director of Investor Relation, Lavanya Sareen. Please go ahead.

Executive
Lavanya Sareen

Thanks, Michele. Hi good morning everyone and thank you for joining us for Alaska Air Group's fourth quarter and full year 2014 earnings call. Before we get into the results for our fourth quarter, we hope we have got a chance to see the results of the spectacular fourth quarter turnaround by our other CFO, our Chief Football Officer, Russell Wilson. Our entire team at Alaska congratulates the NFC champion Seattle Seahawk on their win last Sunday and we wish them all the luck for the Super Bowl next week.

For the earnings call today our CEO Brad Tilden; our other CFO Brandon Pedersen; and our Senior VP of Planning & Revenue Management, Andrew Harrison will provide highlights from the fourth quarter and our outlook for the first quarter and full year 2015. Several members of our senior management team are also on hand to help answer your question.

Our comments today will include forward-looking statements regarding our future expectations, which may differ significantly from actual results. Information on risk factors that could affect our business can be found in our SEC filings. We will refer to certain non-GAAP financial measures such as adjusted earnings and unit costs, excluding fuel. We have provided a reconciliation between the most directly

Executive
Unidentified Speaker

comparable GAAP and non-GAAP measures in our earnings release.

This morning, Alaska Air Group reported a fourth quarter GAAP net profit of $148 million. Excluding mark-to-market fuel hedge gains of $6 million and a $30 million benefit related to certain post requirement benefit plans and a one-time gain associated with a legal settlement, Air Group reported a record adjusted net profit of $125 million or $0.94 per diluted share. This result compares to first call consensus of $0.93 per share and exceeds last year's adjusted net income of $77 million or $0.55 per diluted share.

For the full year, Air Group reported a record adjusted net profit of $571 million compared to $383 million in 2013. Adjusted earnings per share grew by 55% from $2.17 per share in 2013 to $4.18 per share.

Additional information about cost expectations, capacity plans, fuel hedging, capital expenditures and other items can be found in our investor update included in our Form 8-K issued this morning and available on our website at alaskaair.com.

And now, I'll turn the call over to Brad.

Executive
Brad Tilden

Thanks, Lavanya, and good morning, everyone. We are very happy to be talking with you again. We had a record year on almost every front even as we approached the end of the second year with much more competition