Alaska Airlines Reports Mixed Q2 Results And Cautious Q3 Outlook, Enhances Premium Services

Alaska Air Group, Inc ALK reported second-quarter 2024 total operating revenue growth of 2% year-over-year to $2.897 billion, missing the consensus of $2.945 billion.

Adjusted EPS stood at $2.55, down from $3.00 a year ago, beating the consensus of $2.39.

“It’s clear that premium airlines are rising above the rest of the industry, and Alaska’s product and performance put us in that top tier, with a strong long-term outlook to grow and compete. That’s how we brought in record quarterly revenue and achieved a 15.8% adjusted pretax margin that should lead the industry,” commented CEO Ben Minicucci.

Revenue passengers rose 3% Y/Y, traffic was up 2%, capacity gained 6% Y/Y, and load factor contracted from 87%% to 84.1%.

Economic fuel cost per gallon for the quarter rose 3% Y/Y to $2.84.

Alaska Air repurchased 663,177 shares of common stock for ~$28 million in the quarter, bringing total repurchases to $49 million for the six months ended June.

The airline generated $580 million in operating cash flow for the quarter. As of June-end, the company held $2.5 billion in unrestricted cash and marketable securities.

ALK ended the quarter with a debt-to-capitalization ratio of 45%, within the target range of 40% to 50%.

Alaska Airlines received one E175 aircraft during the quarter, bringing the total in the Horizon fleet to 44.

During the quarter, ALK received six 737-9 and three 737-8 aircraft, added a second 737-800 freighter, and expanded Alaska Air Cargo’s network with twice-weekly service to Los Angeles.

The airline purchased a 600,000-square-foot facility in Renton, Washington, for its training programs and operational teams, to open in 2025 after renovations.

ALK reached a tentative agreement with mainline flight attendants, recognizing their contributions. Voting on the agreement will conclude by mid-August.

Additionally, Alaska Airlines announced that it is expanding its fleet with 1.3 million new premium seats annually, enhancing First Class and Premium Class features while maintaining four lavatories. This move meets rising demand and boosts comfort, making upgrades more accessible for business and leisure travelers.

Q3 Guidance: Alaska Air expects EPS of $1.40-$1.60 versus $2.05 consensus; ASMs expected to be Up 2%-3% compared to 2023 And sees economic fuel cost per gallon between $2.85 to 2.95.

2024 Guidance: ALK expects EPS of $3.50-$4.50 (prior $3.25-$5.25) versus $4.49 consensus; ASMs expected to be < 2.5% compared to 2023 and sees Capex Of $1.2 billion – $1.3 billion.

Price Action: ALK shares are trading higher lower 1.80% at $39.31 premarket at the last check Thursday.

Photo Courtesy: Robin Guess On Shutterstock.com