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

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Alaska Air Group ALK 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


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 and American Airlines Group AAL. 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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