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Monday, February 7, 2005

Box Scores: 2004 Financials

Horizon Air (Unit of Alaska Air Group [ALK]) {Alaska Air, Frontier Airlines}
4th Quarter Trend | 2003-2004 Trend 4th Quarter 2004 4th Quarter 2003 Percent Change Year-End 2004 Year-End 2003 Percent Change
UP | UP Operating Revenue
$128.9M
$121.5M
6.1%
$503.8M
$463.8M
8.5%
UP | UP Operating Expenses
$129M
$116M
11.2%
$493.9M
$457.1M
8.1%
DN | DN CASM
16.25 cents
19.62 cents
(17.2%)
16.2 cents
18.06 cents
(10.3%)
DN | DN RASM
16.26 cents
18.74 cents
(13.2%)
15.9 cents
17.76 cents
(10.5%)
DN | DN Operating Income
($100,000)
$5.5M
(101.8%)
$9.3M
$6.7M
38.8%
DN | DN Pre-Tax Income
($1.6M)
$5.4M
(129.6%)
$17.1M
$25.1M
(32.4%)
DN | DN Yield
21.85 cents
27.72 cents
(21.2%)
22.5 cents
26.96 cents
(16.5%)
DN | DN ALK Net Income
($44.9M)
($16.1M)
(178.8%)
($15.3M)
$13.5M
(213.3%)
Analysis: Last year Horizon flew nine CRJ 700s as a code-share partner for Frontier Airlines - this was its first code-share partnership. While it flew 23 percent of its capacity for Frontier, the contract generated 9 percent of Horizon's total revenue. In 2005, Horizon can earn performance bonuses from Frontier if its exceeds performance benchmarks established in 2004. JPMorgan analyst Jamie Baker estimated that Horizon's RASM would be 10.4 percent lower than it posted in the fourth quarter of 2003; instead it was 15.9 percent lower. The Horizon capacity will grow 12 percent as it receives the last of its new CRJ 700s..

Midwest Connect (Unit of Midwest Air Group [MEH]) {Midwest Airlines}
4th Quarter Trend | 2003-2004 Trend 4th Quarter 2004 4th Quarter 2003 Percent Change Year-End 2004 Year-End 2003 Percent Change
UP | UP CASM
21.32 cents
20.3 cents
5%
21.25 cents
18.21 cents
16.7%
UP | UP RASM
23.96 cents
21.52 cents
11.3%
22.98 cents
20.28 cents
13.3%
UP | UP Yield
35.37 cents
35.32 cents
0.1%
36.8 cents
33.28 cents
10.6%
DN | DN MEH Net Loss
($19.3M)
($1.5M)
nm
($43.1M)
($13.2M)
(224.8%)
DN | DN MEH Loss Per Share
($1.11)
0.10 cents
nm
($2.47)
0.85 cents
(190.6%)
Analysis: The operating costs at Midwest Connect were up 11 percent due to higher fuel costs and new maintenance contracts. In the fourth quarter, the holding company spent more than $20 million from its cash balances. Midwest Connect will be increasing its capacity by 6 percent in the first quarter. Part of the capacity growth is a substitution of the 32-seat Dornier 328Jet on the Milwaukee to Indianapolis routes for the 19-seat Beech 1900D.

Air T [AIRT]
3rd Quarter Trend | Nine-Month Trend 3rd Quarter Dec. 31, 2004 3rd Quarter Dec. 31, 2003 Percent Change Nine Months Dec. 31, 2004 Nine Months Dec. 31, 2003 Percent Change
UP | UP Air Cargo Revenue
$10.6M
$10M
6%
$28.6M
$25.8M
10.9%
UP | UP Equipment Revenue
$8.2M
$2.9M
182.8%
$21.1M
$11.8M
78.8%
UP | UP Total Revenue
$18.3M
$12.9M
41.9%
$49.7M
$37.6M
32.2%
UP | UP Total Expenses
$17.5M
$12.4M
41.9%
$47.2M
$35.5M
33%
UP | UP Net Income
$485,290
$230,020
110%
$1.5M
$937,226
60%
UP | UP Net Income Per Share
18 cents
11 cents
63.6%
15.9 cents
15.9 cents
16%

Analysis: Growth in air cargo revenue at Air T was held down in the last reporting period due to a slower than expected change over in its fleet. Air T dry leases 91 planes from its primary customer, FedEx. It is in the process of retiring Fokker F27s with ATR-42s. The conversion of the ATRs into cargo craft took longer than anticipated leaving the fleet short as some Fokkers had already been retired.

Alpine Air Express [ALPE]
Annual Trend Year Ending Oct., 31, 2004 Year Ending Oct., 31, 2003 Percent Change
UP Operating Revenue
$14.9M
$10.2M
46.1%
UP Direct Costs
$13.4M
$9.2M
45.7%
UP Total Expenses
$2.8M
$2.6M
7.7%
UP Net Loss
($1.3M)
($1.4M)
7.1%
DN Net Income Per Share
(23 cents)
(13 cents)
(76.9%)

Analysis: In the first six months of its new Hawaii mail contract, revenues were up 45 percent over the same period of 2003. Higher operating and fuel costs, in part associated with the start of the Hawaii contract, strained the company's cash resources. CEO Gene Mallette had the company defer dividends and note payment due to partnerships he controls in conjunction with 2003 aircraft purchases. The company's Chile operation loss $196,725.

( ) Indicates corporate affiliation. { } indicates code-share partnerships. nm - not meaningful.
Sources: Company reports, JPMorgan
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