Carrying more passengers at higher fares while burning cheaper jet fuel was a winning combination last year for Alaska Air Group, the parent company of Alaska Airlines and Horizon Air. The Seattle-based company announced strong 2019 profits Tuesday and said it plans to hire nearly 2,800 employees in 2020, mostly in the Pacific Northwest.
The carrier made $769 million in profit last year, up 76% from $437 million in 2018.
Alaska said it plans to hire about 400 pilots — divided equally between Alaska and Horizon — as well as more than 300 flight attendants, more than 1,100 passenger-service agents, 450 ground-service agents and 90 maintenance technicians, plus various other positions.
Most of those jobs will be based at the airline’s main airport hubs in Seattle and Portland, Alaska said. However, hundreds of ground-service and passenger-service-agent job openings at Horizon are at other smaller airports.
Alaska CEO Brad Tilden said the financial results show the successful integration of Virgin America over the three years since Alaska acquired the San Francisco-based carrier in December 2016. The company said the exteriors of all the Airbus jets in the Virgin fleet have now been repainted in Alaska’s livery, and new Alaska interiors have been installed on 60% of those aircraft.
“2019 was a fantastic year as we completed the majority of that work and began to see significant returns from our investment,” Tilden said in a statement. “We’re grateful to our people for pulling together to produce this strong financial performance, and proud that they are sharing in this financial success through our incentive pay program.”
The Alaska Airlines pilot union, the Air Line Pilots Association (ALPA), which has been negotiating a contract with management for more than nine months, took the opportunity to call for that deal to be closed.
“We have seen our peers at other airlines enjoy prominent gains,” the union’s executive council said in a statement. “With profit margins above industry average, it’s time for Alaska Airlines management to recognize that to attract and retain well qualified, professional pilots, this airline must offer a market-rate contract to pilots.”
Revenue up, costs down
The fourth quarter and full-year 2019 financial results, announced after the market close on Tuesday, show that passenger revenue per seat per mile flown — a key indicator of airline performance — rose 4.2% for the year, while the price of jet fuel fell 3.9%. Those factors eclipsed a 2.3% rise in nonfuel costs for the year.
Alaska carried 46.7 million passengers in 2019, up 2% from the previous year, and the average revenue per passenger was up 3.5% for the year. Revenue for the year was $8.8 billion, up 6% year-on-year.
In the fourth quarter, passenger numbers were up 5.4% year-on-year, and the average revenue per passenger was up 3.7% year-on-year, leading to a more than 8% jump in overall revenue to $2.2 billion for the quarter.
Tilden duly announced a 7% increase in Alaska’s quarterly dividend, from $0.35 per share to $0.375 per share, which will be paid to shareholders in March.
Alaska reported that its 22,500 employees were awarded $163 million in incentive pay in 2019, an increase of 11% over the previous year.
The profit comparison with the previous year is helped by much higher merger-related costs in 2018. But even adjusting for those one-time costs, the profit for 2019 would be $798 million, compared to $554 million in 2018, a jump of 44%.
In the fourth quarter, Alaska reported a net profit of $181 million or $1.46 per share, compared to a profit of $23 million, or $0.19 per share a year earlier.
Adjusting for one-time merger costs, the fourth-quarter comparison for 2018 would have been a profit of $93 million, or $0.75 per share.