Alaska Air Group ALK has caught an updraft after initial turbulence digesting its 2016 acquisition of Virgin America, reporting third-quarter adjusted pre-tax profit margin of 18% – 3 percentage points higher than the same period a year ago.
The strong performance was driven by 8% growth in operating revenue to almost $2.4 billion, outpacing a 3% rise in expenses.
Alaska Air, which includes its mainline subsidiary and regional carrier Horizon Air, so far is the only domestic passenger airline to have growth in cargo revenue this year in a down year for airfreight overall. For the third quarter, cargo revenue increased 9% to $60 million and is up 15% to $169 million for the first nine months of 2019. Alaska's cargo business, however, is about a third to a quarter that of bigger competitors United Airlines, Delta Air Lines and American Airlines.
Group net income was $326 million, up 37.5%, excluding modest merger-related charges and fuel hedging expenses, with earnings per share of $2.63 beating consensus estimates of $2.52.
The Seattle-based airline generated $1.4 billion in operating cash flow for the nine-month period.
Mainline revenue per available seat mile grew 4.5% to 12.83 cents, and load factors crept up to 86.2%.
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