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Alaska Air Group (ALK) Beats on Q1 Earnings, Misses Sales
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Alaska Air Group (ALK - Free Report) , which acquired Virgin America in December last year, reported mixed results in the first quarter of 2017. The carrier’s earnings of $1.05 per share beat the Zacks Consensus Estimate by a penny. However, the bottom line contracted 27.6% on a year-over-year basis due to higher costs.
Revenues came in at $1,749 million, which fell short of the Zacks Consensus Estimate of $1,782.7 million. The top line grew 29.8% on a year-over-year basis. Passenger revenues, that improved 31% on a year-over-year basis, accounted for bulk of the top line.
The results failed to find favor with the investors. Consequently, the stock was down in pre-market trading.
Operating Statistics
Airline traffic, measured in revenue passenger miles, rose 36.6% year over year to 11,708 million in the first quarter of 2017. Capacity or available seat miles increased 37.7% to 14,394 million. Load factor (percentage of seats filled by passengers) decreased 70 basis points to 81.3%, owing to traffic growth being outpaced by capacity expansion.
Passenger revenue per available seat mile (PRASM: a key measure of unit revenues) decreased 4.9% year over year to 10.31 cents. While total revenue per available seat mile (RASM) declined 5.7% to 12.15 cents in the reported quarter, yield declined 4.1% to 12.68 cents.
Operating Expenses & Income
In the quarter under review, total operating expenses (on a reported basis) rose 50% year over year to $1,583 million primarily due to the 33% rise in wages and benefits. Operating income declined 43% to $166 million from the prior-year quarter. Fuel price (economic) was $1.78 per gallon, up 38%. Consolidated unit cost or cost per available seat mile – excluding fuel and special items – decreased 1.6% to 8.37 cents.
Alaska Air Group, Inc. Price, Consensus and EPS Surprise
Alaska Air Group exited the year with long-term debt of $2,531 million compared with $2,645 million at the end of 2016. At the end of the quarter, adjusted debt-to-capitalization ratio was 58% compared with 59% at 2016-end. In fact, the carrier paid a dividend of 30 cents per share in the first quarter, up 9% year over year.
Other Important Releases Coming Up
Investors interested in the airline space keenly await the first-quarter earnings reports of SkyWest, Inc. (SKYW - Free Report) , Spirit Airlines (SAVE - Free Report) and Copa Holdings (CPA - Free Report) , slated to be released on Apr 27, Apr 28 and May 10, respectively.
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Alaska Air Group (ALK) Beats on Q1 Earnings, Misses Sales
Alaska Air Group (ALK - Free Report) , which acquired Virgin America in December last year, reported mixed results in the first quarter of 2017. The carrier’s earnings of $1.05 per share beat the Zacks Consensus Estimate by a penny. However, the bottom line contracted 27.6% on a year-over-year basis due to higher costs.
Revenues came in at $1,749 million, which fell short of the Zacks Consensus Estimate of $1,782.7 million. The top line grew 29.8% on a year-over-year basis. Passenger revenues, that improved 31% on a year-over-year basis, accounted for bulk of the top line.
The results failed to find favor with the investors. Consequently, the stock was down in pre-market trading.
Operating Statistics
Airline traffic, measured in revenue passenger miles, rose 36.6% year over year to 11,708 million in the first quarter of 2017. Capacity or available seat miles increased 37.7% to 14,394 million. Load factor (percentage of seats filled by passengers) decreased 70 basis points to 81.3%, owing to traffic growth being outpaced by capacity expansion.
Passenger revenue per available seat mile (PRASM: a key measure of unit revenues) decreased 4.9% year over year to 10.31 cents. While total revenue per available seat mile (RASM) declined 5.7% to 12.15 cents in the reported quarter, yield declined 4.1% to 12.68 cents.
Operating Expenses & Income
In the quarter under review, total operating expenses (on a reported basis) rose 50% year over year to $1,583 million primarily due to the 33% rise in wages and benefits. Operating income declined 43% to $166 million from the prior-year quarter. Fuel price (economic) was $1.78 per gallon, up 38%. Consolidated unit cost or cost per available seat mile – excluding fuel and special items – decreased 1.6% to 8.37 cents.
Alaska Air Group, Inc. Price, Consensus and EPS Surprise
Alaska Air Group, Inc. Price, Consensus and EPS Surprise | Alaska Air Group, Inc. Quote
Liquidity
At the end of the quarter, this Zacks Rank #3 (Hold) company had $1,710 million in cash and marketable securities compared with $1,580 million at the end of 2016. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Alaska Air Group exited the year with long-term debt of $2,531 million compared with $2,645 million at the end of 2016. At the end of the quarter, adjusted debt-to-capitalization ratio was 58% compared with 59% at 2016-end. In fact, the carrier paid a dividend of 30 cents per share in the first quarter, up 9% year over year.
Other Important Releases Coming Up
Investors interested in the airline space keenly await the first-quarter earnings reports of SkyWest, Inc. (SKYW - Free Report) , Spirit Airlines (SAVE - Free Report) and Copa Holdings (CPA - Free Report) , slated to be released on Apr 27, Apr 28 and May 10, respectively.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more.
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