Alaska Air Group, Inc. (NYSE:ALK) Q1 2016 Earnings Conference Call - Final Transcript

Apr 21, 2016 • 11:30 am ET

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Alaska Air Group, Inc. (NYSE:ALK) Q1 2016 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning. My name is Sean, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Alaska Air Group First Quarter 2016 Earnings Conference Call. Today's call is being recorded and will be accessible for future playback at www.alaskaair.com. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question-and-answer session for analysts and journalists. [Operator Instructions] Thank you. I'd now like to turn the call over to Alaska Air Group's Managing Director of Investor Relations, Lavanya Sareen. Please go ahead, sir.

Executive
Lavanya Sareen

Thanks, Sean. Good morning, everyone, and thank you for joining us for Alaska Air Group's First Quarter 2016 Earnings Call. On the call today, our CEO, Bradley Tilden, will provide an overview of the business, our Chief Commercial Officer, Andrew Harrison, will share the revenue results for the quarter, followed by Brandon Pedersen, our CFO, who will discuss our financial results, capital allocation plans, and outlook for 2016. Several members of our senior management team are also on hand to help answer your questions.

As a reminder, 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've provided a reconciliation between the most directly comparable GAAP and non-GAAP measures in our earnings release. In addition, today's call may be deemed a solicitation in respect of Alaska Air Group's contemplated acquisition of Virgin America. The information discussed today is qualified in its entirety by the proxy statement that Virgin America will be filing in the future. And that will be available on Virgin America's inventor relations page at ir.virginAmerica.com. All right. With that lengthy disclosure done, let's look at the results.

This morning Alaska Air Group reported the first quarter GAAP net profit of $184 million. Excluding the small important of mark-to-market adjustments related to our fuel hedge portfolio, Air Group reported a record adjusted net income of $183 million. That's up 23%. Earnings per share grew by 29.5%, $1.45 per share. The higher growth rate in EPS is driven by over 7.3 million shares that we have repurchased during the last 12 months. 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
Bradley Tilden

Thanks, Lavanya. And good morning, everyone. Before I jump into the results for this quarter, I want to talk for a minute about our proposed acquisition of Virgin America. Virgin America and Alaska share similar philosophies about building alignment with and taking care of our people and about putting customers first. Both of us run strong operations. We're both recognized for our