Alaska Airlines and Virgin America's combined passenger
revenue increased 2 percent year over year to $1.5 billion in the first
quarter.
CEO Brad Tilden said the carriers are still "unlocking
the value of the merger." The merged company expects to receive a single
operating certificate in the first quarter of next year. Since the close of the
merger, corporate sales activity has been "very encouraging," SVP of
external relations Joe Sprague said.
Alaska brought in the entire Virgin America sales team, and
together, they have reached out to the more than 300 corporate accounts that have
agreements with Alaska and/or Virgin to sync them up across both carriers, he
said. "A lot of those accounts are in Seattle and the Bay Area, where the
tech activity is quite strong right now," Sprague said. "Overall, we
have seen an uptick in corporate revenue, in particular from the Bay
Area."
Alaska plans changes to Virgin America service at Dallas
Love Field, including downsizing
some Virgin routes that had been losing money to regional aircraft, chief
commercial officer Andrew Harrison said. The carriers also have better aligned
transcontinental schedules, but other major schedule changes are likely after
the two carriers fully integrate, at which time the Virgin America brand will be
retired.
"The key to Alaska Air's shares in the next seven
months is integration execution," Cowen and Co. said in a research note.
" The tweaks Alaska did to Virgin America should give investors confidence
in the potential of an integrated company."
The carriers' combined traffic increased 4.7 percent year
over year during the first quarter, and capacity increased 4.9 percent. Load
factor declined 0.2 percentage points to 81.3 percent.
The
company reported net income of $99 million for the quarter, compared with $184
million in the first quarter of 2016, which did not include Virgin America's
results. The carriers faced a sharp increase in expenses during the quarter,
especially in fuel costs.