Alaska Air Profit Hit by Merger Costs

Alaska Air Group Inc. said profit fell in the third quarter, hurt by merger-related costs as the company looks to wrap its tie-up with Virgin America Inc.

Alaska Air late September said it agreed with the Justice Department to hold off on consummating its planned marriage with Virgin America, giving regulators more time to review the deal. Alaska in April announced a $2.6 billion offer to acquire San Francisco-based Virgin America. On Thursday, Chief Executive Brad Tilden said the company was "fully focused on completing our merger with Virgin America."

The company booked $22 million in merger-related costs in the third quarter. Excluding those costs and other items, earnings topped Wall Street's expectations.

In the September quarter, Alaska Air's unit revenue—the amount it takes in per seat flown a mile—fell 5.8% compared with the prior-year quarter. The metric is closely watched as a sign of demand and how well an airline is generating sales. Unit revenues have been declining across the industry because of relatively rapid expansions. Alaska Air's capacity rose 8.1% year-over-year.

Over all, Alaska Air earned $256 million, or $2.07 a share, down from $274 million, $2.14, a year ago. Excluding items, such as merger-related costs and mark-to-market fuel hedge adjustments, the company earned $2.20 a share. Analysts expected $2.09 on an adjusted basis, according to Thomson Reuters.

Revenue rose 3% to $1.57 billion, while analysts expected $1.56 billion.

Aircraft fuel expenses, including hedging gains and losses, declined 8% in the period from a year ago.

Shares were inactive in premarket trading.

Write to Joshua Jamerson at [e-mail]

(END) Dow Jones Newswires

October 20, 2016 07:25 ET (11:25 GMT)

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