Alaska Air Group narrows 1Q loss

Alaska Air Group Inc., parent of Alaska Airlines and Horizon Air, said Thursday it narrowed its first-quarter loss and will start charging for a first checked bag like most other airlines.

The company lost $19.2 million compared to a year-ago loss of $37.3 million.

The Seattle-based airline operator said its January-March loss was 53 cents a share compared with a loss of $1.01 a share a year ago.

Revenue came to $742.4 million, compared to $839.5 million a year ago.

Alaska Air Group's adjusted first-quarter loss was 70 cents a share. Analysts polled by Thomson Reuters expected Alaska Air Group to post a first-quarter loss of 49 cents a share on revenue of $735 million. Analysts generally exclude one-time items from their estimates.

Shares of Alaska Air Group fell $2.44, or 12.3 percent, to close at $17.38 in Thursday trading.

"While our first quarter financial results improved over last year due to a significant decline in fuel cost, we're disappointed to report a loss for the quarter. To minimize the impact of the steep decline in air travel demand, we have reduced our schedules, reallocated capacity and taken fare actions," said Bill Ayer, Alaska Air Group's chairman and chief executive officer.

Alaska Airlines' mainline passenger traffic in the first quarter declined 7.7 percent on a 9.3 percent capacity decrease, compared to the first quarter of 2008. Horizon Air's passenger traffic in the first quarter declined 20.4 percent on a 16.5 percent capacity decrease, compared to the first quarter of 2008.

The parent company said the new $15 fee for a first checked bag - effective July 7 for tickets purchased beginning May 1 - includes a guarantee to compensate passengers if their luggage is not at baggage claim 25 minutes after their flight parks at the gate. If that happens, customers will receive 2,500 Alaska Airlines Mileage Plan miles or $25 off a future flight.

First class passengers, elite frequent fliers, unaccompanied minors, military personnel on active duty and passengers traveling to or from Mexico City and Guadalajara, Mexico, will not be charged for a first checked bag, Alaska Air Group said.

Earlier this year, Alaska Airlines asked the government to determine whether privately held Virgin America continues to meet the qualifications for being a U.S. air carrier. It cited media reports that called into question Virgin America's compliance with U.S. foreign ownership and control restrictions on domestic carriers.

Under U.S. law, foreign ownership in a U.S. air carrier is limited to 25 percent of the voting interest in the carrier.

Some analysts say Alaska Airlines and United Airlines would stand to gain if Virgin America, which flies mainly transcontinental routes, were to cease operations temporarily or permanently.

Burlingame, Calif.-based Virgin America, which launched in 2007, has insisted it is in full compliance with U.S. law and that it is a U.S.-controlled and operated airline. British billionaire Richard Branson's Virgin Group is a minority holder in Virgin America.

Alaska Air Group has said Alaska Airlines isn't questioning Virgin America's ownership status because of its rivalry with the carrier, but rather it believes there needs to be transparency and it wants the DOT to ensure all airlines are held to the same standard of compliance with U.S. law.

But Virgin America's chief executive has said he believes the dispute has everything to do with competition. Alaska Airlines and Virgin America compete largely in Seattle, San Francisco and Los Angeles.

To date, the DOT has not taken any action on Alaska Airlines' petition.

Together, Alaska Airlines and Horizon Air serve more than 90 cities through their network in Alaska, Hawaii, the continental U.S., Canada and Mexico. Last November, Alaska Air Group signed an expanded marketing alliance with Atlanta-based Delta Air Lines Inc., the world's biggest airline operator.