Alaska Air Group, Inc. (ALK, Financial) reported first-quarter revenue of $3.14 billion, falling just short of the analysts' expectations of $3.16 billion. Despite this marginal miss, the company remains confident in its strategic direction and future growth.
CEO Ben Minicucci emphasized the company's strong focus on safety, efficiency, and performance during uncertain economic conditions. He noted that the company is actively managing controllable factors and is dedicated to strengthening its foundational operations for sustained long-term success.
Alaska Air is witnessing growth in scale, relevance, and customer loyalty within its key hubs. The airline is already beginning to realize synergies from its recent combination with Hawaiian Airlines, which is contributing to its expanding market presence.
The company is progressing with its Alaska Accelerate strategic plan, and the business model, refined over decades, is positioned to support continued growth and resilience in the coming years. Employee engagement and enthusiasm are also at unprecedented levels, bolstering confidence in the company’s trajectory.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 13 analysts, the average target price for Alaska Air Group Inc (ALK, Financial) is $69.26 with a high estimate of $90.00 and a low estimate of $54.00. The average target implies an upside of 50.20% from the current price of $46.11. More detailed estimate data can be found on the Alaska Air Group Inc (ALK) Forecast page.
Based on the consensus recommendation from 17 brokerage firms, Alaska Air Group Inc's (ALK, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Alaska Air Group Inc (ALK, Financial) in one year is $70.21, suggesting a upside of 52.27% from the current price of $46.11. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Alaska Air Group Inc (ALK) Summary page.
ALK Key Business Developments
Release Date: January 23, 2025
- GAAP Net Income: $71 million for Q4 2024; $395 million for full year 2024.
- Adjusted Net Income: $125 million for Q4 2024; $625 million for full year 2024.
- Adjusted EPS: $0.97 for Q4 2024; $4.87 for full year 2024.
- Adjusted Pre-Tax Margin: 7.1% for full year 2024.
- Revenue: $3.5 billion for Q4 2024, up nearly 10% year over year.
- Share Repurchases: $248 million in December; over $300 million for full year 2024.
- Premium Cabin Revenue: Increased by 10% for full year 2024.
- Loyalty Program Cash Remuneration: $2.1 billion in 2024.
- Debt to Cap: 58% at year end 2024.
- Net Debt to EBITDAR: 2.4 times at year end 2024.
- Q1 2025 Guidance: Expected loss per share of $0.50 to $0.70.
- Full Year 2025 EPS Target: More than $5.75.
- CapEx for 2025: $1.4 billion to $1.5 billion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Alaska Air Group Inc (ALK, Financial) reported a strong fourth-quarter and full-year GAAP net income of $71 million and $395 million, respectively, with adjusted net income of $125 million and $625 million.
- The company exceeded its guidance with an adjusted EPS of $0.97 for Q4 and $4.87 for the full year 2024.
- ALK aggressively repurchased $248 million in shares during December, fully exhausting its existing program, and launched a new $1 billion share repurchase program in January.
- The acquisition of Hawaiian Airlines has strengthened ALK's strategic assets, including a leading position in a top 25 US hub and a valuable brand.
- ALK's loyalty programs generated $2.1 billion in cash remuneration in 2024, with strong initial demand for its new premium credit card and the Huaka'i by Hawaiian loyalty benefits program gaining traction.
Negative Points
- The four-week grounding of the 9 MAX aircraft negatively impacted ALK's results, preventing it from posting the best margin in the industry.
- ALK expects its Hawaiian assets to be unprofitable in Q1 2025, although a small pretax profit is anticipated from Q2 onwards.
- Fourth-quarter unit costs were up 8.6% year over year, with performance-based pay accruals contributing to the increase.
- ALK's first-quarter earnings are expected to result in a loss per share of $0.50 to $0.70, reflecting normal seasonality but still a material improvement year over year.
- The integration of Hawaiian Airlines is still in progress, with a single operating certificate and unified reservation system expected by the end of 2025.
