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Alaska Air (ALK) Incurs Q1 Loss, Misses Revenue Estimates

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Alaska Air Group, Inc. (ALK - Free Report) reported first-quarter 2023 loss of 62 cents per share, wider than the Zacks Consensus Estimate of a loss of 48 cents. In the year-ago quarter, ALK incurred a loss of $1.33 per share.

Operating revenues of $ 2,196 million missed the Zacks Consensus Estimate of $2,202.5 million. The top line jumped 31% year over year, with passenger revenues accounting for 90.3% of the top line and increasing 31% owing to continued recovery in air-travel demand.

Passenger revenues totaled $1,984 million in the reported quarter. On a year-over-year basis, cargo and other revenues of $58 million remained flat year over year. Mileage plan other revenues grew 38% to $154 million.

Alaska Air Group, Inc. Price, Consensus and EPS Surprise

 

Alaska Air Group, Inc. Price, Consensus and EPS Surprise

Alaska Air Group, Inc. price-consensus-eps-surprise-chart | Alaska Air Group, Inc. Quote

 

Total revenue per available seat mile (a key measure of unit revenues) jumped 15% year over year to 13.98 cents. Yield increased 11% to 15.80 cents.

Reflecting the uptick in air-travel demand, consolidated traffic (measured in revenue passenger miles) rose 19% to 12.55 billion. To cater to this increased demand, capacity (measured in average seat miles) expanded 14% to 15.71 billion. Consolidated load factor (percentage of seats filled by passengers) increased 3.1 percentage points to 79.9% in the first quarter of 2023.

In the first quarter, total operating expenses (on a reported basis) escalated 27% year over year to $2,382 million, with aircraft fuel expenses, including hedging gains and losses, skyrocketing 92%.

Economic fuel price per gallon climbed 30% to $3.41. Consolidated operating costs per available seat mile (excluding fuel and special items) fell 1% year over year to 10.53 cents.

Liquidity

As of Mar 31, 2023, Alaska Air had $2,429 million of cash and marketable securities compared with $2,417 million at the end of December 2022.

ALK exited the first quarter of 2023 with long-term debt (net of current portion) of $1,795 million compared with $1,883 million at the end of December 2022. Debt-to-capitalization ratio was 48% compared with 49% at December 2022-end.

ALK generated $222 million in cash from operating activities in the first quarter.

ALK resumed the share repurchase program by purchasing 413,554 shares for $18 million in the first quarter.

Outlook

For the second quarter of 2023, Alaska Air expects capacity to improve by 6-9% from the year-ago reported figure. Cost per available seat mile, excluding fuel and special items, is expected to grow 1-3% year over year. Total revenues are anticipated to grow 2.5-5.5% year over year. ALK forecasts the economic fuel cost per gallon in the $2.95-$3.15 band. Adjusted pre-tax margin is anticipated to be between 14% and 17%.

For 2023, ALK continues to expect earnings per share of $5.50 to $7.50. The Zacks Consensus Estimate of $5.70 lies within the guidance.

The adjusted pre-tax margin is anticipated to be between 9% and 12%, and the full-year tax rate is expected to be around 25%. The company continues to expect share repurchases of at least $100 million in 2023.

Currently, Alaska Air carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performances of Other Transportation Companies

J.B. Hunt Transport Services, Inc.’s (JBHT - Free Report) first-quarter 2023 earnings of $1.89 per share missed the Zacks Consensus Estimate of $2.04 and declined 17.5% year over year.

JBHT’s total operating revenues of $3,229.58 million also lagged the Zacks Consensus Estimate of $3,434.4 million and fell 7.4% year over year. The downfall was due to declines in the volume of 25% in Integrated Capacity Solutions (ICS), 5% in Intermodal (JBI) and 17% in Final Mile Services (FMS), and a 17% decline in revenue per load in Truckload (JBT). Revenue declines in ICS, JBI, FMS and JBT were partially offset by Dedicated Contract Services revenue growth of 13%.

JBHT’s total operating revenues, excluding fuel surcharges, decreased 10.2% year over year.

Delta Air Lines’ (DAL - Free Report) first-quarter 2023 earnings (excluding 82 cents from non-recurring items) of 25 cents per share missed the Zacks Consensus Estimate of 29 cents. Volatile fuel price and unfavorable weather conditions led to this downtick. DAL reported a loss of $1.23 per share a year ago, dull in comparison to the current scenario, as air-travel demand was not so buoyant then.

DAL reported revenues of $12,759 million, which missed the Zacks Consensus Estimate of $12,767.4 million. Driven by higher air-travel demand, total revenues increased 36.49% on a year-over-year basis.


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