Alaska Air Sees Flatter Demand

The company posts a first-quarter loss.
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Alaska Air

(ALK) - Get Report

posted a first-quarter loss owing to the soft revenue environment and higher fuel costs, and the carrier said it faces mounting West Coast competition.

"We see continued flattening demand," said CEO Bill Ayer on a conference call Thursday. "The proliferation of airlines in our market underscores the need to execute our plan."

But Ayer projected a full-year profit, noting that Alaska's results are highly seasonal. "It's not unusual to have a loss for the first quarter, even in a good year," he said.

He said

Delta

(DALRQ)

, expanding in Los Angeles, has added service to most of Alaska's Mexico destinations, and low-cost carriers are also expanding in the West.

At any rate, he promised Alaska will battle to retain market share. "Every carrier's got to have a certain amount of geography that they've got to own," he said.

Excluding special items related to fuel hedging, Alaska lost $15.8 million, or 39 cents a share, in the quarter. Revenue was $759.4 million, up 3.3%. Analysts surveyed by Thomson Financial had expected a loss of 32 cents a share on revenue of $767.9 million.

A year earlier, excluding items, the carrier had net income of $2.8 million, or 8 cents a share. Accounting for all items, Alaska lost $10.3 million, or 26 cents a share, this year.

Capacity grew 2.8%, and load factor fell 2.3 percentage points to 71.4%. Mainline revenue per available seat increased 0.1%, while cost per available seat mile, excluding fuel and charges, fell by 1.3% to 7.8 cents.

Ayer said the carrier will continue its plan to reduce CASM to the 7-cent range, largely as a result of a move to a new, all-Boeing fleet, so that it can compete successfully on fares.