Shares of Alaska Air Group (ALK - Free Report) gained 3.4% at the close of business on Mar 24 following its improved first-quarter 2022 outlook.
For the first quarter, ALK expects capacity to decline approximately 11-12% from the first quarter of 2019 compared with the previous expectation of a 10-13% decrease. Revenue passengers are estimated to fall 17-18% from the comparable period in 2019 (previous guidance: decrease of 19-21%).
Alaska Air predicts load factor (percentage of seats filled by passengers) to be 76-78% in the current quarter (previous guidance: 71-74%). Total revenues are now expected to decline 11-12% from the 2019 level compared with 14-17% decrease estimated earlier.
Cost per available seat miles, excluding fuel and special items, is forecast to increase 18-19% in the first quarter from the comparable period in 2019 (previous expectation: increase of 15-18%). Economic fuel cost per gallon is now estimated to be $2.62 in the first quarter (previous expectation: $2.60-$2.65). Non-operating expenses are expected to be $6-$8 million compared with $8-$10 million anticipated previously. Adjusted tax rate is forecast to be 24-25% in the first quarter.
Alaska Air’s raised first-quarter guidance is due to improved demand and yields. The company said that Omicron-induced woes caused softness in bookings in January, following which, demand in the first quarter has been trending above 2019 level. Expectations of benefits from the extension of ALK’s co-branded credit card agreement with Bank of America have also boosted the company’s guidance. The two companies have extended their co-branded partnership through 2030. Besides enhancing benefits for guests, the partnership is expected to improve profitability for the airline. On a separate note, the airline plans to expand its network by 4-8% per year through 2025.
Alaska Air has also announced plans to accelerate its transition to a single mainline fleet. To this end, the company plans to retire all Airbus A320 aircraft by early 2023. It also plans to shift to a single regional fleet by retiring all Q400 aircraft by 2023 end.
For the full year, Alaska Air expects capacity to increase 1-3% from the 2019 level compared with the previous expectation of an increase of 2-6%. Cost per available seat miles, excluding fuel and special items, is estimated to increase 3-5% from the 2019 level compared with an increase of 1-3% forecast earlier. Adjusted pre-tax margin is predicted to be 6-9%. Economic fuel price per gallon is expected to be $2.80 for the full year. Capital expenditures are expected to be $1.6-$1.7 billion for the full year.
Zacks Rank & Key Picks
Alaska Air carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks within the broader Transportation sector are as follows:
USA Truck sports a Zacks Rank #1 (Strong Buy). The company’s earnings have surpassed the Zacks Consensus Estimate in three of the preceding four quarters (in line in one), the average surprise being 64.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of USA Truck have rallied more than 44% in the past six months.
GATX Corporation (GATX - Free Report) carries a Zacks Rank #2 (Buy). The company has an impressive earnings surprise history. Its earnings have surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 27.7%.
Shares of GATX have appreciated more than 35% in the past six months.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
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Shares of Alaska Air Group (ALK - Free Report) gained 3.4% at the close of business on Mar 24 following its improved first-quarter 2022 outlook.
For the first quarter, ALK expects capacity to decline approximately 11-12% from the first quarter of 2019 compared with the previous expectation of a 10-13% decrease. Revenue passengers are estimated to fall 17-18% from the comparable period in 2019 (previous guidance: decrease of 19-21%).
Alaska Air predicts load factor (percentage of seats filled by passengers) to be 76-78% in the current quarter (previous guidance: 71-74%). Total revenues are now expected to decline 11-12% from the 2019 level compared with 14-17% decrease estimated earlier.
Cost per available seat miles, excluding fuel and special items, is forecast to increase 18-19% in the first quarter from the comparable period in 2019 (previous expectation: increase of 15-18%). Economic fuel cost per gallon is now estimated to be $2.62 in the first quarter (previous expectation: $2.60-$2.65). Non-operating expenses are expected to be $6-$8 million compared with $8-$10 million anticipated previously. Adjusted tax rate is forecast to be 24-25% in the first quarter.
Alaska Air’s raised first-quarter guidance is due to improved demand and yields. The company said that Omicron-induced woes caused softness in bookings in January, following which, demand in the first quarter has been trending above 2019 level. Expectations of benefits from the extension of ALK’s co-branded credit card agreement with Bank of America have also boosted the company’s guidance. The two companies have extended their co-branded partnership through 2030. Besides enhancing benefits for guests, the partnership is expected to improve profitability for the airline. On a separate note, the airline plans to expand its network by 4-8% per year through 2025.
Alaska Air has also announced plans to accelerate its transition to a single mainline fleet. To this end, the company plans to retire all Airbus A320 aircraft by early 2023. It also plans to shift to a single regional fleet by retiring all Q400 aircraft by 2023 end.
For the full year, Alaska Air expects capacity to increase 1-3% from the 2019 level compared with the previous expectation of an increase of 2-6%. Cost per available seat miles, excluding fuel and special items, is estimated to increase 3-5% from the 2019 level compared with an increase of 1-3% forecast earlier. Adjusted pre-tax margin is predicted to be 6-9%. Economic fuel price per gallon is expected to be $2.80 for the full year. Capital expenditures are expected to be $1.6-$1.7 billion for the full year.
Zacks Rank & Key Picks
Alaska Air carries a Zacks Rank #5 (Strong Sell).
Some better-ranked stocks within the broader Transportation sector are as follows:
USA Truck sports a Zacks Rank #1 (Strong Buy). The company’s earnings have surpassed the Zacks Consensus Estimate in three of the preceding four quarters (in line in one), the average surprise being 64.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of USA Truck have rallied more than 44% in the past six months.
GATX Corporation (GATX - Free Report) carries a Zacks Rank #2 (Buy). The company has an impressive earnings surprise history. Its earnings have surpassed the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 27.7%.
Shares of GATX have appreciated more than 35% in the past six months.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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