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Alaska Air (ALK) Q1 Loss Narrower Than Expected, Revenues Miss

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Alaska Air Group (ALK - Free Report) incurred a loss of 82 cents per share (excluding $1.05 from non-recurring items) in the first quarter of 2020, narrower than the Zacks Consensus Estimate of a loss of $1.27. In the year-ago quarter, the company reported earnings of 17 cents. The downturn is due to unprecedented drop in air travel demand in the wake of the coronavirus outbreak.

Having started in February, the downfall aggravated in March, with cancellations exceeding bookings. Demand is around 90% below the normal level.

Revenues came in at $1,636 million, missing the Zacks Consensus Estimate of $1,691.1 million. The top line also declined approximately 13% year over year. Passenger revenues — contributing 90.5% to the top line — were down 14% on a year-over-year basis.

Operating Statistics

Consolidated traffic, measured in revenue passenger miles, declined 14.4% year over year in the reported quarter. Capacity (measured in available seat miles) dropped 1.3%. Load factor (percentage of seats occupied by passengers) deteriorated 1,070 basis points to 69.6% as traffic declined more than the amount of capacity contraction.
 
Total revenue per available seat mile (RASM: a key measure of unit revenues) fell 11.7% year over year to 10.69 cents in the quarter under discussion. Meanwhile, yield inched up 0.9% to 13.9 cents.

Operating Expenses & Income

In the first quarter, total operating expenses (on a reported basis) were up 6% year over year to $1,957 million, with expenses on wages and benefits increasing 10%. Fuel price (economic) was $1.93 per gallon, down 9.4% year over year.

The company reported operating loss of $321 million in the first quarter against operating income of $25 million in the year-ago quarter. Consolidated cost per available seat mile — excluding fuel and special items — inched up 1.8% to 9.22 cents.

Alaska Air Group, Inc. Price, Consensus and EPS Surprise

 

Alaska Air Group, Inc. Price, Consensus and EPS Surprise

Alaska Air Group, Inc. price-consensus-eps-surprise-chart | Alaska Air Group, Inc. Quote

 

Liquidity

At the end of the first quarter, this Seattle, WA-based company had $2,125 million in cash and marketable securities compared with $1,521 million at the end of 2019.

This Zacks Rank #3 (Hold) company exited the quarter with long-term debt of $1,203 million compared with $1,264 million at the end of 2019. Adjusted debt-to-capitalization ratio was 48% compared with 41% at the end of December 2019. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Airline Stocks

Delta Air Lines (DAL - Free Report) incurred a loss of 51 cents (excluding 33 cents from non-recurring items) in the March quarter, narrower than the Zacks Consensus Estimate of a loss of 72 cents. In the year-ago quarter, the company reported earnings (on an adjusted basis) of 96 cents per share. Total revenues of $8,592 million lagged the Zacks Consensus Estimate of $9,637.5 million and also declined 18% year over year.

Southwest Airlines (LUV - Free Report) incurred loss of 15 cents per share (excluding 3 cents from non-recurring items) in the first quarter of 2020, narrower than the Zacks Consensus Estimate of 48 cents. In the year-ago period, the company reported earnings of 70 cents per share. The results reflect the coronavirus-induced drop in passenger demand. Meanwhile, operating revenues of $4,234 million lagged the Zacks Consensus Estimate of $4,397 million and also declined 17.8% year over year.

American Airlines (AAL - Free Report) incurred a loss (excluding $2.61 from non-recurring items) of $2.65 per share, wider than the Zacks Consensus Estimate of a loss of $2.16. The company reported earnings per share of 52 cents in the year-ago quarter. Results in first-quarter 2020 were hurt by the coronavirus-induced decline in air-travel demand. Operating revenues of $8,515 million declined 19.6% year over year and also fell short of the Zacks Consensus Estimate of $9,146.7 million.

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