Back to top

Image: Bigstock

Alaska Air Group Stock Sinks 40.3% in a Month: Here's Why

Read MoreHide Full Article

Shares of Alaska Air Group (ALK - Free Report) , the holding company of Alaska Airlines, have lost 40.3% compared with the industry’s 20.4% decline in the past month.

Alaska Airlines, like most of its peers, has been hit hard by the sharp drop in air-travel demand due to the coronavirus outbreak, which dented its prospects in the process.

Coronavirus-Caused Agony Hurts Alaska Airlines’ Growth

Due to the coronavirus-induced waning demand, Alaska Airlines plans to reduce capacity by 70% for April and May. In fact, Alaska Airlines expects demand to be significantly suppressed for the next several months.

Alaska Airlines apart, other carriers, namely Delta Air Lines (DAL - Free Report) , United Airlines (UAL - Free Report) and American Airlines (AAL - Free Report) trimmed capacity in the wake of dwindling demand due to the global health hazard.

Additionally, to tackle this unprecedented crisis, Alaska Airlines suspended its quarterly dividend payouts and buybacks. It is also looking to curtail costs in the face of weakening revenues (down in excess of 80% since the commencement of the outbreak).

Some cost-cutting measures include slashing officer pays through Sep 30, laying off contractors and temporary workers, reducing duty hours for management employees, freezing annual pay hikes and asking employees to show interest in taking leave of absence voluntarily. The company is also controlling capital expenditures.

To bolster its balance sheet, the carrier drew down $400 million on its line of credit and closed another secured loan for $425 million as well.

Zacks Rank

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

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>