Alaska Air ekes out small profit, says merger with Virgin on track

SEATTLE – Alaska Air Group reported a small first quarter profit Monday of $4 million, or 3 cents a share, on revenue of $1.8 billion.

That was down from $93 million, or 75 cents a share, a year ago. But it was a better result than management had forecast at the end of last year, when it predicted a loss for the first quarter due to the continuing costs of the merger with Virgin America and a highly competitive airline market.

Excluding one-time charges, including merger-related costs and $25 million paid out in January to employees in $1,000 bonuses related to federal tax cut legislation, the adjusted earnings figure was 14 cents a share, which beat Wall Street analyst expectations of 12 cents a share.

In early trading Monday, Alaska Air stock was up $2.39, or 3.7 percent, at $67.78.

Alaska Air chief executive Brad Tilden said in a news release that the integration of Alaska Airlines with Virgin America is going well.

“We’re excited to get the biggest integration milestones behind us in the next couple of months and then turn our full focus to running a great airline,” Tilden said.

In the first quarter, the Federal Aviation Administration (FAA) gave the company a single operating certificate, formally recognizing Alaska Airlines and Virgin America as one airline.

And earlier this month, management reached agreement with its 5,700 Alaska Airlines and Virgin America flight attendants on a merger transition plan so that the two sets of crew members will be employed under a single contract.

That followed a similar deal with Alaska Air’s pilots in December.

While those steps toward integrating the two airlines are largely invisible to passengers, the next step – happening Wednesday – is a merging of the passenger service systems of the two airlines, which will combine them into one from the passenger perspective.

That shift will provide a single reservation system and a single website to book tickets. At the same time, passengers should find Alaska branding at all gates, ticketing and check-in areas at the 29 airports in the U.S. and Mexico served by the airlines.

Alaska has already started painting some of Virgin’s Airbus jets in Alaska colors and in the fall will begin installing new interior cabins in those airplanes.

The remake of the Virgin fleet to make its look consistent with Alaska’s won’t be complete until late in 2019, after which the Virgin America brand essentially disappears.

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)2018 The Seattle Times

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AP-WF-04-23-18 1825GMT