FREE ESSAY ON ALASKA AIRLINES

ALASKA AIRLINES

Alaska Airlines
For nearly 70 years, Alaska Airlines has served the west coast of North America. Alaska
Airlines has grown from a small regional airline in 1932 to one today that carries more
than 12 million customers per year. Alaska's route system spans more than 40 cities and
primarily services four countries: Canada, United States, Mexico, and Russia. Its fleet
of 88 Boeing jets is the youngest among all major airlines and it has earned U.S. airline
recognition from Travel & Leisure and Conde Nast Traveler magazines.
The foundation of Alaska Airlines began in 1932, when Mac McGee started flying his
three-seat Stinson between Anchorage and Bristol Bay, Alaska. In 1934, a merger with Star
Air Service created the then-largest airline in Alaska. By the late 1940s, using surplus
military aircraft, Alaska had branched into worldwide charter work, including the Berlin
Airlift in 1948 and Operation Magic Carpet, the airlift of thousands of Yemenite Jews, to
Israel in 1949. In the late 1960s, Alaska strengthened its operating base by merging with
Alaska Coastal-Ellis and Cordova airlines, legendary Southeast Alaska carriers owned by
aviation pioneers Shell Simmons, Bob Ellis and Mudhole Smith. Alaska's world now
stretched from Fairbanks south to Ketchikan and down to Seattle. And in some of the
coldest days of the Cold War, Alaska made headlines with regular charters to the Soviet
Union. 
In 1972, Alaska Airlines faced severe financial difficulties. Fairbanks businessmen Ron
Cosgrave and Bruce Kennedy were hired and they are credited with salvaging the airline,
and winning the trust of creditors, employees, and customers by improving time
performance and customer service. In addition, construction of the trans-Alaska pipeline
brought a surge in business to the airline through the transport of supplies, equipment
and workers. Finally, Cosgrave and Kennedy focused on customer service. 
In 1987, Alaska Airlines merged with Horizon Air and Jet America and increased its fleet
five-fold. The following section provides an overview of the history of Alaska Airlines.
Alaska Airlines History by Decade 
1930s
The company that ultimately became Alaska Airlines was born in 1932 when Linious Mac
McGee painted McGee Airways on the side of a three-passenger Stinson and started flying
out of Anchorage. In 1934, McGee merged with Star Air Service, creating the largest
airline in Alaska with 22 aircraft. Flying in those days wasn't scheduled. You typically
flew when the plane was full, be it passenger, furs or groceries. Finances were tight,
but perseverance ruled the day. Business expanded in '37 with the purchase of Alaska
Interior Airlines. Late that year, McGee sold Star to a group led by one of his former
pilots, Don Goodman, who renamed the carrier Star Air Lines. The 1938 creation of the
Civil Aeronautics Authority to regulate airlines signaled the end of the true bush-flying
era. 
1940s 
Star Air Lines received most of the routes it wanted from the CAA but was denied the
coveted Alaska/Seattle run. That went to Pan American. Star bought three small Alaskan
carriers in 1942, changed its name to Alaska Star Airlines and then Alaska Airlines in
1944. The company grew despite a shortage of workers during the war, feuds with the CAB,
and cash troubles that had employees paying for fuel out of their own pockets. In the
late '40s, charter operations overshadowed scheduled service, and Alaska became the
largest charter operator in the world. Using surplus military aircraft, it flew
everywhere, carrying food in the Berlin Airlift and refugees to the settlement of Israel.

1950s 
The airline expanded in 1950 with the purchase of two more small Alaskan carriers. Under
CAB mandate, the far-flung charter business of the '40s was ended. But Alaska's dream
came true in '51, when it received authority to fly from Anchorage and Fairbanks to
Seattle and Portland. The CAB forced what it considered a business-saving change in
management a short time later. As a result, Alaska's financial footing was improved,
though still tenuous, when Charlie Willis, a decorated World War II pilot, came aboard as
chairman and CEO in '57. A born marketer, he ushered in one of the most colorful eras in
company history, and brought in-flight movies to the nation's skies for the first time. 
1960s 
While the jet age was just coming to Alaska Airlines in the 1960s, the marketing age was
in full stride. Flight attendants wore Gay '90s and Russian Cossack costumes. Charters
were flying to Russia, and in-flight announcements were turned to rhymes. 
A life vest neat is beneath each seat.
They're stored so we won't lose 'em.
Now fix your eyes on the stewardies.
They'll show you how to use 'em.
Alaska became the first commercial carrier to fly the Lockheed Hercules, hauling drilling
rigs to Alaska's oil-rich North Slope and later to the jungles of Ecuador. The Boeing
727, the company's signature aircraft for 25 years, joined the fleet in the mid-60s.
Alaska debuted in Southeast Alaska at Sitka in '67, and a year later merged with two
long-time Southeast airlines, Alaska Coastal-Ellis and Cordova. 
1970s 
Alaska was on the brink of collapse when the Board prescribed a change in management in
1972. A new team, led by Ron Cosgrave, took the helm. The financially faltering ship was
righted, and pains were taken to improve customer service, particularly on-time
performance. In '73, the company turned a profit and, for the first time in years, there
appeared to be prospects for long-term stability. Bruce Kennedy, an integral part of
Cosgrave's team, became CEO in '79, the same year U.S. skies were deregulated. Alaska was
one of only three carriers that pushed for deregulation, knowing significant growth would
be impossible without it. At the time, the airline served 10 cities in Alaska and one -
Seattle - in the lower 48. Its fleet numbered 10. 
1980s 
Alaska expanded in a measured, yet opportunistic fashion throughout the 1980s. Following
the '79 start of service to Portland and San Francisco, expansion over the next five
years brought Alaska to Southern California, Oakland, San Jose, Spokane, Boise, Phoenix
and Tucson and saw resumption of service to Nome and Kotzebue. Revenues and profits
soared. Alaska Air Group was formed in '85 as a holding company for the airline and a
year later acquired Horizon Air and Jet America Airlines. In a move bolstering its
north-south route structure and complementing the seasonal nature of travel to Alaska,
the airline launched service to Mexico in 1988. Growth there has been dramatic. 
1990s 
With the growing success of low-cost/low-fare carriers, the airline industry changed in
fundamental ways in the 90s. Streamlining its cost structure and increasing aircraft
utilization, Alaska Airlines reshaped itself faster and more comprehensively than any
carrier - all while maintaining a competitive advantage in customer service. The new
motto, For the same price, you just get more, resonated with customers. When coupled with
an unmatched market presence on the West Coast, the recipe added up to record passenger
traffic and greater profitability. An aggressive fleet modernization plan and a
nationally recognized commitment to technological innovation have positioned the airline
well as it moves into the new century. 
NTSB Statistical Data
The following chart illustrates the statistical data available on incidents per
Alaska/Horizon versus All Carriers:
1980-89 1990-95 1996-1999 2000
AA: B727 4 1 0 0
AA: B737 0 1 5 0
AA: deHaviland 1 0 1 0
AA: MD80 0 0 4 0
All: B727 154 48 36 4
All: deHaviland 101 46 52 6
All: MD80 7 3 9 1
All:B737 64 77 89 11
( In Millions, Except Per Share Amounts) 1998
Revenues and Income
Operating revenues $ 1,897.7
Operating expenses 1,686.7
Operating income 211.0
Net income 124.4
Basic earnings per share 5.32
Diluted earnings per share 4.81
Average number of common shares outstanding -
Basic 23.4
Diluted 26.4
Assets and Equity
Total assets $ 1,731.8
Total shareholders ' equity 789.5
Return on shareholders ' equity 19.7% %
Book value per share $ 30.11
Debt/ equity ratio 18: 82
Employees at year end 12,464
Shareholders of record at year end 4,687
Consolidated Financial Highlights
Corporate Profile
Alaska Air Group, Inc., is the holding company for Alaska Airlines and Horizon Air,
Seattle- based carriers that collectively serve more than 70 destinations in the Western
U. S., Canada, and Mexico. Alaska Air Group was organized as a Delaware corporation in
1985.
Alaska Airlines, Inc., an Alaska corporation founded in 1932, is noted for its award-
winning customer service. The airline, which accounts for about 80% of Air Group
revenues, provides scheduled air service to 36 cities in Alaska, Washington, Oregon,
California, Nevada, Arizona, and British Columbia, plus six destinations in Mexico. Its
major hubs are Anchorage, Seattle, Portland, and Los Angeles. Horizon Air Industries,
Inc., a Washington corporation organized in 1981, is similarly noted for outstanding
customer service. Horizon accounts for about 20% of Air Group revenues and provides air
transportation to 40 destinations in Washington, Oregon, Idaho, Montana, California,
British Columbia, and Alberta. Its major hubs are Seattle, Portland, and Boise.