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Alaska Air Group (ALK) Tops Q2 Earnings, Revenue Estimates

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Alaska Air Group (ALK - Free Report) that acquired Virgin America in December last year, performed well in the second quarter of 2017. The carrier’s earnings of $2.51 per share beat the Zacks Consensus Estimate by a penny. Moreover, the bottom line expanded 18.4% on a year-over-year basis. Results were aided by higher revenues.

Revenues came in at $2,102 million, just ahead of the Zacks Consensus Estimate of $2,096.3 million. The top line grew 41% on a year-over-year basis. In fact, passenger revenues that improved 43% on a year-over-year basis, accounted for bulk of the top line (86%).

Operating Statistics

Airline traffic, measured in revenue passenger miles, rose 44.2% year over year to 13,554 million in the reported quarter. Capacity or available seat miles increased 41.1% to 15,612 million. Load factor (percentage of seats filled by passengers) increased 190 basis points to 86.8% owing to traffic growth outpacing capacity expansion.

Passenger revenue per available seat mile (PRASM: a key measure of unit revenues) increased 1.3% year over year to 11.57 cents. While total revenue per available seat mile (RASM) declined 0.4% to 13.46 cents in the reported quarter, yield declined 0.8% to 13.33 cents.

Operating Expenses & Income

In the quarter under review, total operating expenses (on a reported basis) rose 50% year over year to $1,609 million primarily owing to the 41% rise in wages and benefits. Operating income increased 18% to $493 million from the prior-year quarter. Fuel price (economic) was $1.71 per gallon, up 11.8%. Consolidated unit cost or cost per available seat mile – excluding fuel and special items – increased 2.1% to 7.94 cents backed by high labor costs.

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 #2 (Buy) company had $1,922 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 quarter with long-term debt of $2,469 million compared with $2,645 million at the end of 2016. At the end of the quarter, adjusted debt-to-capitalization ratio was 55% compared with 59% at 2016-end. In fact, the carrier paid a dividend of 30 cents per share in the second quarter, up 9% year over year.

Other Important Releases Coming Up

Investors interested in the airline space keenly await the second-quarter earnings reports of SkyWest, Inc. (SKYW - Free Report) , Spirit Airlines (SAVE - Free Report) and American Airlines Group (AAL - Free Report) . While SkyWest and Spirit Airlines are scheduled to report results on Jul 27, American Airlines will unveil its earnings report on Jul 28.

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