Alaska Air Group, parent of Alaska Airlines (AS) and Horizon Air, earned first-quarter net income of $37 million, down 11% from $41 million in the year-ago period.

Excluding the impact of mark-to-market fuel hedge adjustments of $12 million, the company reported a first-quarter “record” net income of $44 million, compared to $28 million in 2012.

Revenue lifted 9% to $1.13 billion while operating expenses were $1.07 billion, up 11% year-over-year, producing an operating income of $64 million, down 11% from $72 million in the first quarter of 2012.

Alaska Air Group CEO Brad Tildensaid, “Our record performance in what is seasonally our weakest quarter is due to steady demand that kept pace with our growth, and to the many changes we've made to improve our business over the last several years.”

First-quarter mainline traffic jumped 9.5% to 6.17 billion RPMs on a 9.6% rise in capacity to 7.2 billion ASMs, producing a load factor of 85.7%, flat year-over-year.

Yield improved 0.5% to 12.90 cents. CASM ex-fuel declined 3.9% to 7.59 cents.

During the quarter, the airline began new service between San Diego and Boston, and between Seattle and Salt Lake City. The airline announced it will begin new service between San Diego, Calif., and Lihue, Hawaii, and seasonal service between Portland and Fairbanks in June.

“Looking ahead, we’re facing increased competition in certain markets, and we will closely monitor the environment and continue to adjust our plans to appropriately address these challenges,” Tilden said.