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Alaska Air's (ALK) Q3 Earnings Hit by High Fuel & Labor Costs
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Alaska Air Group (ALK - Free Report) reported lower-than-expected earnings per share and revenues in third-quarter 2023, results of which were unveiled yesterday. The underperformance was mainly due to high fuel as well as labor costs. Expenses on wages and benefits rose 14% year over year to $782 million in the reported quarter. The labor deal inked by management with pilots last year has led to increased labor costs.
High fuel costs due to an escalation in oil price are also a bane and hurt third-quarter results. Evidently, oil price jumped 28.5% in the July-September period due to an extension of production cut by Saudi Arabia and Russia through the current-year end. As fuel expenses represent a key input cost for any airline player, the uptick in these costs naturally hurt ALK’s bottom line in the third quarter.
In the third quarter, economic fuel price per gallon was $3.26, up 18.1% from second-quarter 2023 levels. The actual figure was even higher than the third-quarter guidance issued in September following the rise in oil price. In September, management raised its guidance for third-quarter fuel cost per gallon in the $3.15-$3.25 band (earlier estimate was in the $2.7-$2.8 range).
Woes related to high fuel costs are likely to hurt fourth-quarter 2023 results as well. ALK forecasts fourth-quarter economic fuel cost per gallon in the $3.30-$3.40 band.
J.B. Hunt Transport Services’ (JBHT - Free Report) third-quarter 2023 EPS of $1.80 missed the Zacks Consensus Estimate of $1.85 and declined 30% year over year.
JBHT’s total operating revenues of $3,163.8 million also lagged the Zacks Consensus Estimate of $3,224 million and fell 18% year over year. Total operating revenues, excluding fuel surcharges, decreased 15% year over year.
Delta Air Lines (DAL - Free Report) reported third-quarter 2023 EPS (excluding 31 cents from non-recurring items) of $2.03, which comfortably beat the Zacks Consensus Estimate of $1.92 and improved 35% on a year-over-year basis.
DAL’s revenues of $15,488 million beat the Zacks Consensus Estimate of $15,290.4 million and increased 11% on a year-over-year basis, driven by higher air-travel demand.
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Alaska Air's (ALK) Q3 Earnings Hit by High Fuel & Labor Costs
Alaska Air Group (ALK - Free Report) reported lower-than-expected earnings per share and revenues in third-quarter 2023, results of which were unveiled yesterday. The underperformance was mainly due to high fuel as well as labor costs. Expenses on wages and benefits rose 14% year over year to $782 million in the reported quarter. The labor deal inked by management with pilots last year has led to increased labor costs.
High fuel costs due to an escalation in oil price are also a bane and hurt third-quarter results. Evidently, oil price jumped 28.5% in the July-September period due to an extension of production cut by Saudi Arabia and Russia through the current-year end. As fuel expenses represent a key input cost for any airline player, the uptick in these costs naturally hurt ALK’s bottom line in the third quarter.
In the third quarter, economic fuel price per gallon was $3.26, up 18.1% from second-quarter 2023 levels. The actual figure was even higher than the third-quarter guidance issued in September following the rise in oil price. In September, management raised its guidance for third-quarter fuel cost per gallon in the $3.15-$3.25 band (earlier estimate was in the $2.7-$2.8 range).
Woes related to high fuel costs are likely to hurt fourth-quarter 2023 results as well. ALK forecasts fourth-quarter economic fuel cost per gallon in the $3.30-$3.40 band.
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’ (JBHT - Free Report) third-quarter 2023 EPS of $1.80 missed the Zacks Consensus Estimate of $1.85 and declined 30% year over year.
JBHT’s total operating revenues of $3,163.8 million also lagged the Zacks Consensus Estimate of $3,224 million and fell 18% year over year. Total operating revenues, excluding fuel surcharges, decreased 15% year over year.
Delta Air Lines (DAL - Free Report) reported third-quarter 2023 EPS (excluding 31 cents from non-recurring items) of $2.03, which comfortably beat the Zacks Consensus Estimate of $1.92 and improved 35% on a year-over-year basis.
DAL’s revenues of $15,488 million beat the Zacks Consensus Estimate of $15,290.4 million and increased 11% on a year-over-year basis, driven by higher air-travel demand.