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Alaska Air (ALK) Gets Initial $160 M Compensation From Boeing
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Alaska Air Group (ALK - Free Report) has been paid $160 million by plane manufacturer Boeing (BA - Free Report) in first-quarter 2024. This is an initial compensation to address the financial damages incurred as a result of Flight 1282 incident and the subsequent 737-9 MAX groundings.
We remind investors that on Jan 5, ALK’s Ontario, CA-bound flight (1282) saw a panel and window being blown out of Boeing 737 MAX 9 jet shortly after takeoff from Portland, OR. The fiasco prompted the flight to turn back immediately and make an unscheduled emergency landing. Thankfully, none of the 171 passengers or six crew members were seriously injured.
The alarming incident prompted an investigation by U.S. National Transportation Safety Board. Federal Aviation Administration ordered temporary grounding of 171 Boeing 737 MAX 9 jets for safety-related inspection. ALK’s fleet includes 65 such planes.
The current compensation amount of $160 million covers ALK’s pretax loss related to the accident, including lost revenues and the cost of returning its Max 9 fleet to service. ALK resumed MAX 9 service on Jan 26 and expects more compensation from Boeing in the coming days, terms of which remain confidential.
ALK now expects first-quarter 2024 loss in the $1.05-$1.15 per share range, with 95 cents per share of the loss related to the accident and subsequent grounding. Previous expectation was for adjusted first-quarter loss in the 45-55 cents per share band. The new loss forecast is due to a change in its plans to treat the accounting of the compensation.
Management stated that it will account for the compensation, mainly as a reduction to aircraft assets. ALK had initially planned to include the payment in its results. The Zacks Consensus Estimate for first-quarter loss at ALK is currently pegged at 78 cents per share.
Zacks Rank
Alaska Air currently carries a Zacks Rank #3 (Hold).
AL has an encouraging track record with respect to earnings surprise, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The average beat is 20.15%. AL currently carries Zacks Rank #2 (Buy). Continuous fleet growth and increased sales activity are boosting Air Lease's revenues.
The Zacks Consensus Estimate for 2024 earnings has been revised 25.80% upward over the past 60 days. The company has an expected earnings growth rate of 30% for 2024. Shares of AL have rallied 29% in the past year.
SKYW sports a Zacks Rank #1 (Strong Buy) at present. SkyWest's fleet modernization efforts are commendable. The Zacks Consensus Estimate for SKYW’s 2024 earnings has improved 19.22% over the past 60 days. Shares of SkyWest have surged 206.9% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
SKYW has an expected earnings growth rate of more than 100% for 2024. The company delivered a trailing four-quarter earnings surprise of 128.02%, on average.
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Alaska Air (ALK) Gets Initial $160 M Compensation From Boeing
Alaska Air Group (ALK - Free Report) has been paid $160 million by plane manufacturer Boeing (BA - Free Report) in first-quarter 2024. This is an initial compensation to address the financial damages incurred as a result of Flight 1282 incident and the subsequent 737-9 MAX groundings.
We remind investors that on Jan 5, ALK’s Ontario, CA-bound flight (1282) saw a panel and window being blown out of Boeing 737 MAX 9 jet shortly after takeoff from Portland, OR. The fiasco prompted the flight to turn back immediately and make an unscheduled emergency landing. Thankfully, none of the 171 passengers or six crew members were seriously injured.
The alarming incident prompted an investigation by U.S. National Transportation Safety Board. Federal Aviation Administration ordered temporary grounding of 171 Boeing 737 MAX 9 jets for safety-related inspection. ALK’s fleet includes 65 such planes.
The current compensation amount of $160 million covers ALK’s pretax loss related to the accident, including lost revenues and the cost of returning its Max 9 fleet to service. ALK resumed MAX 9 service on Jan 26 and expects more compensation from Boeing in the coming days, terms of which remain confidential.
ALK now expects first-quarter 2024 loss in the $1.05-$1.15 per share range, with 95 cents per share of the loss related to the accident and subsequent grounding. Previous expectation was for adjusted first-quarter loss in the 45-55 cents per share band. The new loss forecast is due to a change in its plans to treat the accounting of the compensation.
Management stated that it will account for the compensation, mainly as a reduction to aircraft assets. ALK had initially planned to include the payment in its results. The Zacks Consensus Estimate for first-quarter loss at ALK is currently pegged at 78 cents per share.
Zacks Rank
Alaska Air currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Investors interested in the broader Transportation sector may consider stocks like Air Lease (AL - Free Report) and SkyWest (SKYW - Free Report) .
AL has an encouraging track record with respect to earnings surprise, having surpassed the Zacks Consensus Estimate in each of the trailing four quarters. The average beat is 20.15%. AL currently carries Zacks Rank #2 (Buy). Continuous fleet growth and increased sales activity are boosting Air Lease's revenues.
The Zacks Consensus Estimate for 2024 earnings has been revised 25.80% upward over the past 60 days. The company has an expected earnings growth rate of 30% for 2024. Shares of AL have rallied 29% in the past year.
SKYW sports a Zacks Rank #1 (Strong Buy) at present. SkyWest's fleet modernization efforts are commendable. The Zacks Consensus Estimate for SKYW’s 2024 earnings has improved 19.22% over the past 60 days. Shares of SkyWest have surged 206.9% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
SKYW has an expected earnings growth rate of more than 100% for 2024. The company delivered a trailing four-quarter earnings surprise of 128.02%, on average.