Jul. 24--SeaTac-based Alaska Air Group, parent company of Alaska Airlines and Horizon Air, on Thursday reported second quarter income of $29.1 million despite sales lower than last year's second quarter.

The profit was either a big increase over the same quarter last year or a big drop depending on which numbers were included.

Including special items such as gains and losses on fuel hedge contracts and new pilot contract transition costs, the company's $29.1 million profit was less than half of the $63.1 million reported on the same basis in the second quarter last year.

Excluding special items in both years, the $26.5 million profit in this year's second quarter was more than $40 million more than the comparable figure in 2008 when the airline holding company lost $14.1 million.

Major factors in the company's April-June profit picture included a dramatic drop in fuel costs over the same period last year, moving underperforming routes to new cities and the hard work of airline employees, Alaska Chairman Bill Ayer said.

With business and pleasure travel still becalmed by the economic situation, major domestic airlines this quarter have announced mixed results.

Continental Airlines reported big losses and announced layoffs of 1,700 workers.

Delta Air Lines reported losses of 31 cents a share in the quarter. And American Airlines said it lost $390 million.

But both Southwest and AirTran airlines reported profits in the quarter.

Alaska's passenger traffic dropped 2.6 percent last month, but its capacity fell further, 4.1 percent, translating to occupancy 1.2 percent above the same time last year.

Revenue fell to $843.9 million from $930.8 million a year earlier in the second quarter.

Ayer said he expects the air travel business to remain challenging while the economy continues to suffer.

Some analysts have speculated that some of the major legacy carriers could face cash crises next winter when traffic drops to yearly lows.

But Alaska said its $1.1 billion in unrestricted cash and marketable securities gives it an ample cushion to survive any further downturns in the economy.

The stock market responded positively to Alaska's earnings report Thursday bidding up the stock by 6.17 percent, or $1.28, to $22.02 at closing.

John Gillie: 253-597-8663

john.gillie@thenewstribune.com

-----

To see more of The News Tribune, or to subscribe to the newspaper, go to http://www.TheNewsTribune.com.

Copyright (c) 2009, The News Tribune, Tacoma, Wash.

Distributed by McClatchy-Tribune Information Services.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

NYSE:ALK, NYSE:CAL, NYSE:DAL, NYSE:AAI,

A service of YellowBrix, Inc.