Alaska Air Group’s almost 14,000 employees will reap the benefit of a record year for the company, with annual performance bonuses totaling $98 million in their paychecks Friday.
Alaska Air Group’s almost 14,000 employees will reap the benefit of a record year for the company, with annual performance bonuses totaling $98 million in their paychecks Friday.
Nearly $56 million in annual bonuses — 57 percent of the total — is being paid to Alaska Airlines and Horizon Air employees in the Puget Sound area.
An additional $14 million is being paid to employees in the Portland area, while $8 million is going to employees throughout the state of Alaska.
The bonus represents more than 9 percent of their annual pay, or nearly five weeks’ additional pay, for most workers. For the past seven years, employees have received an average annual bonus equal to approximately one month’s pay.
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In a conference call Thursday with financial analysts, Alaska’s Chief Executive Brad Tilden said management is “very proud that when our company does well, our employees benefit.”
“This is the seventh consecutive year, where our employees will get a full month’s pay and performance bonus,” Tilden added. “This alignment is very powerful and we believe it will do nothing but benefit us in future years.”
The size of the annual bonuses is determined by the airline’s performance, based on financial, safety and customer-service metrics.
The annual bonus to be paid Friday is on top of the $22 million employees earned in monthly bonuses last year for meeting targets in customer-service satisfaction and on-time performance.
Financially, the airline in 2015 benefited from a dramatic drop in fuel prices and strong domestic demand that offset the effects of lower fares and intense competition from Delta Air Lines at Seattle-Tacoma International Airport.
The cost of jet fuel — the airline’s second-largest expense behind labor — dropped 39 percent year-on-year, and passenger traffic rose 9 percent.
Last year, the airline carried almost 32 million passengers.
Alaska’s net profit for the fourth quarter was a record $191 million, or $1.51 per diluted share, and for the full year a record $848 million, or $6.56 per diluted share.
These results compare with net profit of $148 million, or $1.11 per diluted share in the fourth quarter of 2014. For the full year of 2014, it earned $605 million, or $4.42 per diluted share.
Passenger revenues grew by 6 percent last quarter compared with the fourth quarter of 2014, and by 5 percent compared with full-year 2014.
Alaska increased its quarterly dividend 38 percent.
After the premarket earnings news, the company’s shares rose $5.44, or 8.1 percent, to close at $72.60.
“While every airline has benefited from low fuel prices, Alaska led the industry in many of the underlying drivers of financial performance, areas like operational reliability, customer satisfaction, customer growth and low fares, low cost,” Tilden said.
During the earnings call, analysts pushed for details on how fast Alaska intends to grow since at Sea-Tac airport rivals Delta, Southwest and Spirit Airlines are all adding capacity.
Chief Commercial Officer Andrew Harrison said that as new aircraft are added, the number of available seats in 2016 is expected to expand to 8 percent.
In the second half of 2016, as older Q-400 aircraft are retired, growth will moderate to about 5 percent, he said.
Tilden added that Alaska has until now had “tremendous success” by adding new routes and new jets.
“The returns have been there. Most of the markets we added in 2015 were profitable in the first three months,” he said. “But there is risk to growing at a higher level for a sustained period of time.”