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

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Shares of Alaska Air Group ALK, 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, 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.

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