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Why Is Alaska Air (ALK) Up 38.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for Alaska Air Group (ALK - Free Report) . Shares have added about 38.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Alaska Air due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Alaska Air Posts Loss in Q4
Alaska Air incurred a loss of $2.55 per share (excluding 92 cents from non-recurring items) in the fourth quarter of 2020, narrower than the Zacks Consensus Estimate of a loss of $2.91.
Revenues came in at $808 million, surpassing the Zacks Consensus Estimate of $786.6 million. The top line, however, declined 63.7% year over year. Passenger revenues — contributing 81.3% to the top line — were down 68% on a year-over-year basis to $658 million due to weak travel demand.
Other Details
Consolidated traffic, measured in revenue passenger miles, fell 68.7% year over year in the reported quarter. Consolidated capacity (measured in available seat miles) dropped 42.1%. Load factor (percentage of seats occupied by passengers) deteriorated 38.4 points to 45.3% as traffic plunged more than the amount of capacity contraction. Total revenue per available seat mile (RASM: a key measure of unit revenues) slumped 37.3% year over year to 8.39 cents in the reported quarter. Meanwhile, yield inched up 2% to 15.06 cents.
In the fourth quarter, total operating expenses (on a reported basis) dropped 30% year over year to $1,381 million. Consolidated fuel price (economic) was $1.39 per gallon, tumbling 37.1% year over year. With most of the fleet remaining grounded/under-utilized, fuel gallons consumed were down 45.9% to $117 million. Consolidated cost per available seat mile excluding fuel and special items (non-fuel unit costs) increased 26% to 11.35 cents, mainly due to capacity cuts.
Liquidity
As of Dec 31, 2020, the company had $3,346 million in cash and marketable securities compared with $1,521 million at the end of 2019. The company exited the final quarter of 2020 with long-term debt of $2,357 million compared with $1,264 million at the end of 2019. Inclusive of operating leases, debt-to-capitalization ratio was 61% compared with 41% at the end of December 2019.
Moreover, on Jan 15, 2021, the carrier received $266 million of the total amount of $533 million from the U.S. Treasury. Notably, Alaska Air reached an agreement with the U.S. treasury in January 2021 to receive an extension of the payroll support amounting to $533 million.
Alaska Air’s total liquidity as of Jan 22, 2021 stood at $5.2 billion.
Q1 Outlook
For the first quarter of 2021, the carrier expects capacity to decline roughly 30% from the comparable reported figure of first-quarter 2019. Revenue passengers are likely to plummet in the 60-65% range during first-quarter 2021 from the level reported in the March quarter of 2019.
Total revenues are also likely to decline in the 60-65% range during first-quarter 2021 from the March-quarter 2019 actuals. Passenger load factor in the quarter is expected in the 40-45% range. Non-fuel unit costs for first-quarter 2021 are likely to increase approximately 20% from the recorded first-quarter 2019 levels.Alaska Air
Alaska Air Q1 Loss Narrower Than Expected Alaska Air incurred a loss of 82 cents per share (excluding $1.05 from non-recurring items) in the first quarter of 2020, narrower than the Zacks Consensus Estimate of a loss of $1.27. In the year-ago quarter, the company reported earnings of 17 cents. The downturn is due to unprecedented drop in air travel demand in the wake of the coronavirus outbreak. Having started in February, the downfall aggravated in March, with cancellations exceeding bookings. Demand is around 90% below the normal level. Revenues came in at $1,636 million, missing the Zacks Consensus Estimate of $1,691.1 million. The top line also declined approximately 13% year over year. Passenger revenues — contributing 90.5% to the top line — were down 14% on a year-over-year basis.
Operating Statistics Consolidated traffic, measured in revenue passenger miles, declined 14.4% year over year in the reported quarter. Capacity (measured in available seat miles) dropped 1.3%. Load factor (percentage of seats occupied by passengers) deteriorated 1,070 basis points to 69.6% as traffic declined more than the amount of capacity contraction.
Total revenue per available seat mile (RASM: a key measure of unit revenues) fell 11.7% year over year to 10.69 cents in the quarter under discussion. Meanwhile, yield inched up 0.9% to 13.9 cents. Operating Expenses & Income In the first quarter, total operating expenses (on a reported basis) were up 6% year over year to $1,957 million, with expenses on wages and benefits increasing 10%. Fuel price (economic) was $1.93 per gallon, down 9.4% year over year. The company reported operating loss of $321 million in the first quarter against operating income of $25 million in the year-ago quarter. Consolidated cost per available seat mile — excluding fuel and special items — inched up 1.8% to 9.22 cents. Liquidity At the end of the first quarter, this Seattle, WA-based company had $2,125 million in cash and marketable securities compared with $1,521 million at the end of 2019. The company exited the quarter with long-term debt of $1,203 million compared with $1,264 million at the end of 2019. Adjusted debt-to-capitalization ratio was 48% compared with 41% at the end of December 2019.
Airline traffic, measured in revenue passenger miles, rose 44.2% year over year to 13,554 million in the reported quarter. Capacity or available seat miles increased 41.1% to 15,612 million. Load factor (percentage of seats filled by passengers) increased 190 basis points to 86.8% owing to traffic growth outpacing capacity expansion.
Passenger revenue per available seat mile (PRASM: a key measure of unit revenues) increased 1.3% year over year to 11.57 cents. While total revenue per available seat mile (RASM) declined 0.4% to 13.46 cents in the reported quarter, yield declined 0.8% to 13.33 cents.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -44.36% due to these changes.
VGM Scores
At this time, Alaska Air has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Alaska Air has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is Alaska Air (ALK) Up 38.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Alaska Air Group (ALK - Free Report) . Shares have added about 38.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Alaska Air due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Alaska Air Posts Loss in Q4
Alaska Air incurred a loss of $2.55 per share (excluding 92 cents from non-recurring items) in the fourth quarter of 2020, narrower than the Zacks Consensus Estimate of a loss of $2.91.
Revenues came in at $808 million, surpassing the Zacks Consensus Estimate of $786.6 million. The top line, however, declined 63.7% year over year. Passenger revenues — contributing 81.3% to the top line — were down 68% on a year-over-year basis to $658 million due to weak travel demand.
Other Details
Consolidated traffic, measured in revenue passenger miles, fell 68.7% year over year in the reported quarter. Consolidated capacity (measured in available seat miles) dropped 42.1%. Load factor (percentage of seats occupied by passengers) deteriorated 38.4 points to 45.3% as traffic plunged more than the amount of capacity contraction. Total revenue per available seat mile (RASM: a key measure of unit revenues) slumped 37.3% year over year to 8.39 cents in the reported quarter. Meanwhile, yield inched up 2% to 15.06 cents.
In the fourth quarter, total operating expenses (on a reported basis) dropped 30% year over year to $1,381 million. Consolidated fuel price (economic) was $1.39 per gallon, tumbling 37.1% year over year. With most of the fleet remaining grounded/under-utilized, fuel gallons consumed were down 45.9% to $117 million. Consolidated cost per available seat mile excluding fuel and special items (non-fuel unit costs) increased 26% to 11.35 cents, mainly due to capacity cuts.
Liquidity
As of Dec 31, 2020, the company had $3,346 million in cash and marketable securities compared with $1,521 million at the end of 2019. The company exited the final quarter of 2020 with long-term debt of $2,357 million compared with $1,264 million at the end of 2019. Inclusive of operating leases, debt-to-capitalization ratio was 61% compared with 41% at the end of December 2019.
Moreover, on Jan 15, 2021, the carrier received $266 million of the total amount of $533 million from the U.S. Treasury. Notably, Alaska Air reached an agreement with the U.S. treasury in January 2021 to receive an extension of the payroll support amounting to $533 million.
Alaska Air’s total liquidity as of Jan 22, 2021 stood at $5.2 billion.
Q1 Outlook
For the first quarter of 2021, the carrier expects capacity to decline roughly 30% from the comparable reported figure of first-quarter 2019. Revenue passengers are likely to plummet in the 60-65% range during first-quarter 2021 from the level reported in the March quarter of 2019.
Total revenues are also likely to decline in the 60-65% range during first-quarter 2021 from the March-quarter 2019 actuals. Passenger load factor in the quarter is expected in the 40-45% range. Non-fuel unit costs for first-quarter 2021 are likely to increase approximately 20% from the recorded first-quarter 2019 levels.Alaska Air
Alaska Air incurred a loss of 82 cents per share (excluding $1.05 from non-recurring items) in the first quarter of 2020, narrower than the Zacks Consensus Estimate of a loss of $1.27. In the year-ago quarter, the company reported earnings of 17 cents. The downturn is due to unprecedented drop in air travel demand in the wake of the coronavirus outbreak.
Having started in February, the downfall aggravated in March, with cancellations exceeding bookings. Demand is around 90% below the normal level.
Revenues came in at $1,636 million, missing the Zacks Consensus Estimate of $1,691.1 million. The top line also declined approximately 13% year over year. Passenger revenues — contributing 90.5% to the top line — were down 14% on a year-over-year basis.
Operating Statistics
Consolidated traffic, measured in revenue passenger miles, declined 14.4% year over year in the reported quarter. Capacity (measured in available seat miles) dropped 1.3%. Load factor (percentage of seats occupied by passengers) deteriorated 1,070 basis points to 69.6% as traffic declined more than the amount of capacity contraction.
Total revenue per available seat mile (RASM: a key measure of unit revenues) fell 11.7% year over year to 10.69 cents in the quarter under discussion. Meanwhile, yield inched up 0.9% to 13.9 cents.
Operating Expenses & Income
In the first quarter, total operating expenses (on a reported basis) were up 6% year over year to $1,957 million, with expenses on wages and benefits increasing 10%. Fuel price (economic) was $1.93 per gallon, down 9.4% year over year.
The company reported operating loss of $321 million in the first quarter against operating income of $25 million in the year-ago quarter. Consolidated cost per available seat mile — excluding fuel and special items — inched up 1.8% to 9.22 cents.
Liquidity
At the end of the first quarter, this Seattle, WA-based company had $2,125 million in cash and marketable securities compared with $1,521 million at the end of 2019.
The company exited the quarter with long-term debt of $1,203 million compared with $1,264 million at the end of 2019. Adjusted debt-to-capitalization ratio was 48% compared with 41% at the end of December 2019.
Airline traffic, measured in revenue passenger miles, rose 44.2% year over year to 13,554 million in the reported quarter. Capacity or available seat miles increased 41.1% to 15,612 million. Load factor (percentage of seats filled by passengers) increased 190 basis points to 86.8% owing to traffic growth outpacing capacity expansion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -44.36% due to these changes.
VGM Scores
At this time, Alaska Air has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Alaska Air has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.