Alaska Air (ALK) Up 9.5% Since Last Earnings Report: Can It Continue?

Core Viewpoint - Alaska Air Group reported strong fourth-quarter 2024 results, with both earnings and revenues exceeding expectations, indicating robust operational performance and recovery in air travel demand [2][3][4]. Financial Performance - Quarterly earnings per share (EPS) reached 97 cents, surpassing the Zacks Consensus Estimate of 47 cents and showing over 100% year-over-year improvement [2]. - Operating revenues totaled $3.53 billion, exceeding the Zacks Consensus Estimate of$ 3.51 billion, and reflecting a 38.4% year-over-year increase [4]. - Passenger revenues accounted for 89.9% of total revenues, amounting to $3.17 billion, with a 37% increase due to recovering air travel demand [4]. Operational Metrics - Consolidated traffic grew 35% to 19.06 billion revenue passenger miles, while capacity increased 33% to 22.74 billion average seat miles [6]. - The consolidated load factor rose by 0.9 percentage points to 83.8%, indicating effective capacity management [6]. - Revenue per available seat mile (RASM) increased by 4% to 15.54 cents, while yield rose by 1% to 16.67 cents [5]. Cost and Expenses - Total operating expenses increased by 37% to$ 3.46 billion, with economic fuel prices per gallon decreasing by 26% to $2.54 [6]. - Consolidated operating costs per available seat mile (excluding fuel and special items) grew by 8.6%, reflecting disciplined non-fuel cost management [7]. Liquidity and Capital Management - As of December 31, 2024, Alaska Air had$ 1.20 billion in cash and cash equivalents, up from $1.01 billion in the previous quarter [8]. - The company repurchased 3.9 million shares for$ 250 million during the fourth quarter, totaling 5.5 million shares for $312 million in 2024, and authorized a new$ 1 billion share repurchase plan [9]. Future Outlook - For the first quarter of 2025, Alaska Air anticipates an adjusted loss per share in the range of 50-70 cents, with available seat miles expected to increase by 2.5%-3.5% [9][10]. - EPS for 2025 is projected to remain above $5.75, with capacity expected to grow by 2%-3% year-over-year [10]. Market Sentiment - Recent estimates for Alaska Air have shown a downward trend, with a consensus estimate shift of -112.09% [11]. - Despite the downward revisions, Alaska Air holds a Zacks Rank 2 (Buy), indicating expectations for above-average returns in the coming months [13].