Financial Performance - The company reported a loss before income tax of $233 million for Q1 2025, compared to a loss of $178 million in Q1 2024, with a pro forma pretax loss of $343 million for Q1 2024 [90]. - Adjusted loss before income tax for Q1 2025 was $140 million, an improvement from a loss of $157 million in Q1 2024 [139]. - Alaska Airlines reported a pretax loss of $55 million in Q1 2025, an improvement of $107 million compared to a loss of $162 million in Q1 2024 [121]. - Hawaiian Airlines reported a pretax loss of $88 million in Q1 2025, improved from a pro forma loss of $173 million in Q1 2024 [122]. Revenue and Growth - Total operating revenue increased by $260 million, or 9%, to $3,137 million in Q1 2025, driven by a $223 million increase in passenger revenue, which rose by 9% [98][101]. - Revenue passengers increased by 34.6% to 13,159,000 in Q1 2025 compared to 9,774,000 in Q1 2024 [143]. - RPMs (revenue passenger miles) grew by 37.8% to 17,257 million in Q1 2025 from 12,524 million in Q1 2024 [143]. - Loyalty program other revenue increased by $14 million, or 7%, due to higher commission revenue from bank card and third-party partners [102]. - Cargo and other revenue rose by $23 million, or 23%, attributed to the addition of aircraft in Alaska's and Hawaiian's cargo fleets [103]. Operating Expenses - Pro forma operating expenses increased by $132 million, or 4%, totaling $3,334 million in Q1 2025, with aircraft fuel expenses decreasing by $78 million, or 10% [104][108]. - Total non-fuel operating expenses increased by $161 million, or 7%, to $2,562 million in the first quarter of 2025 compared to the same period in 2024 [111]. - Wages and benefits rose by $66 million, or 6%, to $1,127 million, driven by higher wage rates across multiple labor groups [112]. - Variable incentive pay increased by $13 million, or 27%, due to the inclusion of Hawaiian employees in the Performance-Based Pay program [113]. - Aircraft maintenance costs grew by $22 million, or 11%, attributed to higher rates for outside maintenance work and additional maintenance projects [114]. - Landing fees and rentals increased by $30 million, or 14%, due to a higher volume of departures and landed weight [115]. Capacity and Fleet - Capacity growth is anticipated to be between 2% to 3% in Q2 2025, with unit revenue expected to be flat to down low single digits and unit cost projected to rise mid to high single digits [95]. - The total operating fleet increased by 84 aircraft to 399 in Q1 2025 compared to 315 in Q1 2024 [143]. - Total Air Group Fleet is expected to grow from 414 aircraft in 2025 to 448 aircraft by the end of 2027, reflecting a net increase of 34 aircraft [136]. - The company plans to operate ten A330-300 freighters under the ATSA with Amazon, with options to expand the fleet [136]. Fuel Costs - Economic fuel cost per gallon decreased by 13.6% to $2.61 in Q1 2025, compared to $3.02 in Q1 2024 [97][108]. - Economic fuel cost per gallon decreased by 15.3% to $2.61 in Q1 2025 from $3.08 in Q1 2024 [143]. Cash Flow and Capital Expenditures - Cash and marketable securities stood at $2.5 billion as of March 31, 2025, with an $850 million bank line-of-credit facility available [124]. - Operating cash flows were $459 million during the first three months of 2025, primarily from advance ticket sales and co-branded credit card agreements [125]. - Capital expenditures for 2025 are projected to be between $1.4 billion and $1.6 billion [126]. Employee Metrics - The average full-time equivalent employees (FTEs) increased slightly to 29,773 in Q1 2025, compared to 29,718 in Q1 2024 [97].

Financial Data and Key Metrics Changes - The company reported a record revenue of $11.7 billion for 2024, with an adjusted pre-tax margin of just over 7% and adjusted earnings per share growth of 7.5% despite the acquisition of Hawaiian Airlines [11][10]. - The company raised $2 billion in capital markets for the acquisition, maintaining a net leverage of 2.4 times, with a target to reduce it to 1.5 times over the next 12 to 18 months [11]. Business Line Data and Key Metrics Changes - The integration of Hawaiian Airlines is ongoing, with a focus on achieving synergy targets and enhancing operational strengths [2][7]. - The company aims to unlock $1 billion in incremental pre-tax profit over the next three years through commercial initiatives and at least $500 million in synergies [8]. Market Data and Key Metrics Changes - The company is launching an international gateway from Seattle and enhancing its market position in Honolulu, which is a top 25 U.S. hub [12]. - The combined network and wide-body aircraft from the acquisition are expected to serve 90% of destinations from Hawaii, enhancing brand equity and loyalty [13]. Company Strategy and Development Direction - The company’s vision, termed "Alaska Accelerate," focuses on connecting guests globally with a remarkable travel experience rooted in safety, care, and performance [8]. - The strategy includes diversifying revenue streams through partnerships in the cargo business and investing in innovation and sustainability [14]. Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, emphasizing the strength of the existing business model and the resilience demonstrated in 2024 [10][11]. - The company is focused on achieving its 2025 goals, including fuel efficiency, while also setting long-term goals for 2030 to be published early next year [39]. Other Important Information - The company is currently executing share repurchases under a $1 billion authorization as a way to return value to shareholders, with dividends being evaluated for reinstatement when appropriate [36]. - The company’s board of directors has been re-elected with strong shareholder support, and various proposals related to governance and compensation have passed with high approval rates [41][42]. Q&A Session Summary Question: When will Alaska Air Group reinstate dividends? - The company is currently focused on share repurchases as a way to return value to shareholders and will evaluate reinstating dividends when it makes sense [36]. Question: How do tariffs impact the price of US-built aircraft? - Management indicated that there is currently no anticipated impact from tariffs on the delivery of new aircraft [37]. Question: Would Alaska Air Group reconsider its net zero target given the changing legal and regulatory environment? - The company maintains a long-term net zero target but is currently focused on achieving its 2025 goals related to fuel efficiency and plans to set goals for 2030 to be published early next year [39].

Group 1 - The average brokerage recommendation (ABR) for Alaska Air Group (ALK) is 1.27, indicating a consensus between Strong Buy and Buy based on 15 brokerage firms' recommendations, with 86.7% being Strong Buy [2][5] - Despite the positive ABR, reliance solely on this metric for investment decisions may not be advisable, as studies suggest brokerage recommendations often lack success in guiding investors towards stocks with significant price appreciation potential [5][10] - Analysts from brokerage firms tend to exhibit a strong positive bias in their ratings due to vested interests, leading to a disproportionate number of Strong Buy recommendations compared to Strong Sell [6][10] Group 2 - The Zacks Rank, a proprietary stock rating tool, categorizes stocks from Strong Buy to Strong Sell and is based on earnings estimate revisions, which are more effective in predicting near-term stock price movements compared to ABR [8][11] - The Zacks Rank is updated more frequently than the ABR, as it reflects real-time changes in earnings estimates, making it a more timely indicator for future stock prices [12] - For Alaska Air, the Zacks Consensus Estimate for the current year has decreased by 30.7% over the past month to $4.14, indicating growing pessimism among analysts regarding the company's earnings prospects [13][14]

Core Viewpoint - Alaska Air Group (ALK) has experienced a significant decline in stock performance, returning -13.4% over the past month, compared to the Zacks S&P 500 composite's -0.7% and the Zacks Transportation - Airline industry's -11.5% [1] Earnings Estimate Revisions - The consensus earnings estimate for Alaska Air for the current quarter is $1.84 per share, reflecting a year-over-year decrease of -27.8% and a change of -46.7% over the last 30 days [4] - The consensus earnings estimate for the current fiscal year is $4.14, indicating a year-over-year change of -15% and a revision of -30.7% in the last 30 days [4] - For the next fiscal year, the consensus earnings estimate is $6.96, showing a year-over-year increase of +68.2%, although it has changed -11.2% over the past month [5] - The Zacks Rank for Alaska Air is 5 (Strong Sell), indicating a negative outlook based on recent earnings estimate revisions [6] Projected Revenue Growth - The consensus sales estimate for the current quarter is $3.72 billion, representing a year-over-year increase of +28.5% [10] - For the current fiscal year, the revenue estimate is $14.27 billion, indicating a year-over-year change of +21.6%, while the next fiscal year's estimate is $15.47 billion, reflecting an +8.5% change [10] Last Reported Results and Surprise History - Alaska Air reported revenues of $3.14 billion in the last quarter, a year-over-year increase of +40.6%, with an EPS of -$0.77 compared to -$0.92 a year ago [11] - The reported revenues were slightly below the Zacks Consensus Estimate of $3.16 billion, resulting in a revenue surprise of -0.8%, while the EPS surprise was -6.94% [11] - Over the last four quarters, Alaska Air surpassed consensus EPS estimates three times and topped consensus revenue estimates two times [12] Valuation - Alaska Air is graded B on the Zacks Value Style Score, indicating that it is trading at a discount to its peers [16]

Financial Data and Key Metrics Changes - The company reported a GAAP net loss of $166 million for Q1 2025, with an adjusted net loss of $95 million excluding special items and fuel hedge adjustments [5][6]. - Total revenues reached $3.1 billion, up 9% year over year, with unit revenues increasing by 5% [24][39]. - Adjusted loss per share was $0.77, which was $0.07 or $10 million below guidance [39][41]. Business Line Data and Key Metrics Changes - Premium revenues grew by 10%, representing approximately 34% of total revenues [26]. - Cash remuneration from co-brand cards reached $550 million, up 12% year over year, with new card acquisitions increasing by 26% [25]. - Cargo revenue increased by 36% year over year, supported by the delivery of additional Amazon A330 freighters [19]. Market Data and Key Metrics Changes - Demand for travel to and from Hawaii remains strong, particularly in premium cabins, with unit revenues for Hawaiian Airlines assets up 9% year over year [30][31]. - In Seattle, connecting passengers increased by 15% year over year, indicating strong performance in key hubs [29]. - Overall bookings have stabilized, with Hawaii showing flat to positive loads and yields despite increased capacity [36]. Company Strategy and Development Direction - The company is committed to its "Alaska Accelerate" strategy, focusing on long-term value creation and operational discipline [9][10]. - A share buyback plan of $1 billion over the next four years is in place, with an emphasis on accelerating repurchases due to current stock price trends [12][13]. - The company aims to achieve $10 in earnings per share by 2027, driven by integration synergies and commercial initiatives [13][75]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in remaining profitable in 2025, even in the event of a recession [12]. - The current macroeconomic environment is challenging, but the company believes it can navigate through it effectively [46][47]. - There is optimism regarding the integration of Alaska and Hawaiian Airlines, with synergies tracking ahead of plan [15][20]. Other Important Information - The company is on track to achieve a single operating certificate by Q4 2025, with integration milestones progressing as planned [21][106]. - Employee engagement scores are at record levels, indicating strong alignment and morale within the company [22]. Q&A Session Summary Question: Can you discuss the 2Q guidance and the six-point headwind in RASM? - Management indicated that about 62-63% of the quarter is booked, with softness primarily due to the macro environment rather than internal initiatives [53][54]. Question: What is the outlook for Hawaiian operations? - Hawaiian operations are performing well, with double-digit unit revenue increases and expectations for breakeven margins in the coming quarters [58][57]. Question: How does the competitive environment in California look? - San Diego is performing well, while San Francisco is facing increased competition, leading to a strategic focus on San Diego for growth [62][63]. Question: Why accelerate share repurchases in the current environment? - Management believes the company is undervalued and sees this as an opportunity to buy back shares while maintaining a healthy balance sheet [126][127]. Question: What is the status of the single operating certificate? - The company is confident in meeting the timeline for the single operating certificate, with submissions to the FAA tracking as planned [106][107].

Financial Data and Key Metrics Changes - The company reported a GAAP net loss of $166 million for Q1 2025, with an adjusted net loss of $95 million excluding special items and mark-to-market fuel hedge adjustments [5][12] - Total revenues reached $3.1 billion, up 9% year over year, with unit revenues finishing strong, up 5% [24][40] - Adjusted loss per share was $0.77, which was $0.07 or $10 million below guidance [39] Business Line Data and Key Metrics Changes - Premium revenues grew 10%, representing approximately 34% of total revenues [26] - Cash remuneration from co-brand cards reached $550 million, up 12% year over year, with new card acquisitions increasing by 26% [25] - Cargo revenue increased by 36% year over year, supported by the delivery of additional Amazon A330 freighters [19] Market Data and Key Metrics Changes - Demand for travel to, from, and within Hawaii remains strong, particularly in premium cabins, with loyalty growth and increased membership in loyalty programs [16] - In Seattle, connecting passengers were up 15% year over year, indicating strong performance in key markets [29] - The company expects capacity growth of approximately 2% to 3% in Q2, driven primarily by Hawaiian Airlines assets [34] Company Strategy and Development Direction - The company is committed to its "Alaska Accelerate" strategy, focusing on long-term value creation and strengthening its business [9][10] - Plans to execute a $1 billion share buyback over the next four years, with an emphasis on taking advantage of current low stock prices [12][89] - The company aims to achieve $10 in earnings per share by 2027, with confidence in its ability to deliver on this target despite current challenges [13][74] Management's Comments on Operating Environment and Future Outlook - Management acknowledges a challenging start to the year but remains confident in the company's strategy and ability to weather downturns [9][10] - The current macroeconomic environment is seen as the primary factor affecting performance, with expectations of stabilization in bookings [54][37] - Despite a softer outlook, the company anticipates remaining solidly profitable in 2025 [12][46] Other Important Information - The company is on track to achieve a single operating certificate by Q4 2025, with integration milestones progressing as planned [20][106] - Employee engagement scores are at record levels, indicating strong alignment and energy within the company [22] Q&A Session Summary Question: Can you discuss the 2Q guidance and the six-point headwind in RASM? - Management indicated that about 62-63% of the quarter is booked, with softness primarily due to the macro environment, not internal initiatives [53][54] Question: What is the outlook for Hawaiian operations? - Hawaiian operations are performing well, with double-digit unit revenue increases and expectations for close to breakeven margins in the coming quarters [56][58] Question: How does the competitive environment in California look? - Management noted significant increases in ASMs in San Francisco, while San Diego continues to perform well, prompting further investment in that market [62][63] Question: Why accelerate share repurchases in the current environment? - Management believes the company is significantly undervalued and aims to take advantage of low stock prices while maintaining a healthy balance sheet [87][125] Question: What is the status of the single operating certificate? - The company is confident in meeting the timeline for the single operating certificate, with submissions to the FAA tracking as planned [106] Question: How is the premium product performing amid changing demand? - The first-class cabin is performing strongly, with double-digit revenue increases, and management is committed to maintaining premium seat availability [65][112]

Core Viewpoint - Alaska Air Group, Inc. reported a first-quarter 2025 loss of 77 cents per share, which was wider than the Zacks Consensus Estimate of a loss of 72 cents, but an improvement from a loss of 92 cents per share in the same quarter last year [1][3] Financial Performance - Operating revenues for the quarter were $3.14 billion, missing the Zacks Consensus Estimate of $3.16 billion, but representing a 41% year-over-year increase, with passenger revenues making up 89.5% of the total and increasing by 40% due to strong air-travel demand [1][2] - Passenger revenues totaled $2.81 billion, while cargo and other revenues grew 91% year-over-year to $122 million, and loyalty program revenues increased by 26% to $207 million [2] - Total operating expenses rose 39% to $3.33 billion, with economic fuel prices per gallon decreasing by 15.3% to $2.61 [6] Operational Metrics - Revenue per available seat mile (RASM) increased by 1.9% to 14.79 cents, and yield rose by 1.8% to 16.28 cents [4] - Consolidated traffic, measured in revenue passenger miles, grew by 37.8% to 17.25 billion, while capacity increased by 38% to 21.21 billion, leading to a slight decrease in load factor to 81.3% from 81.4% [5] Liquidity and Capital Structure - As of March 31, 2025, the company had $1.04 billion in cash and cash equivalents, down from $1.20 billion at the end of the previous quarter, and long-term debt decreased to $4.29 billion from $4.49 billion [7] - The debt-to-capitalization ratio stood at 58% at the end of the reported quarter, and the company repurchased 1.8 million shares for nearly $107 million during the first quarter [7] Future Outlook - The company anticipates a revenue impact of nearly 6 percentage points in the second quarter due to recent demand softness, with maximum cost pressure expected in the same period [8] - Adjusted earnings per share for the first quarter of 2025 are projected to be between $1.15 and $1.65, significantly lower than the Zacks Consensus Estimate of $2.52 [9] - Available seat miles are expected to increase by 2% to 3% in the second quarter of 2025 compared to the same period in 2024, while RASM is expected to remain flat to down low single digits [9]

Core Insights - The company reported a Q1 2025 GAAP net loss of $166 million and an adjusted net loss of $95 million due to challenging air travel demand conditions [2][7] - Despite the losses, the company remains confident in its Alaska Accelerate strategy, which aims for $10 earnings per share by 2027, and plans to maintain a $1 billion share buyback commitment over the next four years [4][9] - Q1 2025 total revenue reached $3.1 billion, a 9% increase year-over-year, driven by a 3.9% capacity growth [3][10] Financial Performance - Q1 2025 unit revenues increased by 5% year-over-year, outperforming peers [3][10] - Loyalty revenue generated $550 million in Q1 2025, up 12% year-over-year [3][10] - Premium revenue grew by 10% year-over-year, accounting for 34% of total revenues [3][10] Cost and Guidance - Q1 2025 unit costs rose by 2.1% year-over-year, which was better than expected [4][12] - For Q2 2025, the company expects earnings per share (EPS) to be between $1.15 and $1.65, reflecting a revenue impact of approximately six points due to the demand backdrop [4][12] - The company is pausing full-year guidance updates due to uncertain demand outlook [2][12] Strategic Initiatives - The Alaska Accelerate strategy focuses on scale, relevance, and loyalty, with integration synergies tracking slightly ahead of plan [4][9] - The company is launching a single loyalty platform and premium credit card in summer 2025 to enhance guest experience [5][9] - The company plans to expand its intercontinental service with new flights from Seattle to Tokyo Narita, aiming to serve at least 12 intercontinental destinations by 2030 [5][9] Market Position and Outlook - The company holds a substantial 15% cost advantage over its largest competitors and has a diversified revenue base, with nearly 50% generated outside the main cabin [9][12] - Despite current demand softness, the company expects to remain solidly profitable in 2025 [4][9] - The company is optimistic about its Hawaiian assets, which are expected to approach breakeven for the last three quarters of 2025 [5][9]

Financial Performance - For the quarter ended March 2025, Alaska Air Group reported revenue of $3.14 billion, which is a 40.6% increase compared to the same period last year [1] - The earnings per share (EPS) was -$0.77, an improvement from -$0.92 in the year-ago quarter [1] - The reported revenue was a surprise of -0.80% compared to the Zacks Consensus Estimate of $3.16 billion, while the EPS surprise was -6.94% against the consensus estimate of -$0.72 [1] Key Metrics - Passenger Load Factor was 81.3%, slightly below the average estimate of 82% [4] - Revenue Passenger Miles (RPM) totaled 17.26 billion, compared to the average estimate of 17.42 billion [4] - Total Revenue per Available Seat Mile (RASM) was 14.79 cents, below the average estimate of 15.05 cents [4] - Available Seat Miles (ASM) reached 21.22 billion, close to the average estimate of 21.24 billion [4] - Economic fuel cost per gallon was $2.61, slightly lower than the average estimate of $2.62 [4] - Passenger Yield was 16.28 cents, compared to the average estimate of 16.57 cents [4] - Operating expenses per ASM, excluding fuel and special items, were 11.89 cents, better than the average estimate of 12.49 cents [4] - Fuel gallons consumed were 262 million, exceeding the average estimate of 241.61 million [4] - Average full-time equivalent employees (FTEs) were 29,773, higher than the average estimate of 28,003 [4] - Revenue passengers totaled 13.16 billion, significantly above the average estimate of 10.36 billion [4] - Revenue from cargo and other sources was $122 million, surpassing the average estimate of $110.70 million, representing a year-over-year change of +90.6% [4] - Total Passenger Revenue was $2.81 billion, below the average estimate of $2.90 billion [4] Stock Performance - Shares of Alaska Air have returned -16.5% over the past month, compared to the Zacks S&P 500 composite's -6.6% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Viewpoint - Alaska Air Group reported a quarterly loss of $0.77 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.72, but an improvement from a loss of $0.92 per share a year ago [1][2] Financial Performance - The company posted revenues of $3.14 billion for the quarter ended March 2025, missing the Zacks Consensus Estimate by 0.80%, compared to revenues of $2.23 billion a year ago [2] - Over the last four quarters, Alaska Air has surpassed consensus EPS estimates three times and topped consensus revenue estimates two times [2] Stock Performance - Alaska Air shares have declined approximately 30.6% since the beginning of the year, while the S&P 500 has decreased by 10.1% [3] - The current Zacks Rank for Alaska Air is 3 (Hold), indicating that shares are expected to perform in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $2.52 on revenues of $3.77 billion, and for the current fiscal year, it is $5.19 on revenues of $14.51 billion [7] - The trend of estimate revisions for Alaska Air is mixed, which could change following the recent earnings report [6] Industry Context - The Transportation - Airline industry is currently in the bottom 38% of over 250 Zacks industries, suggesting that the outlook for the industry can significantly impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]