Dj Alaska Air Group Inc. Stock Outperforms Competitors Despite Losses On The Day

In the past week, Alaska Air Group ALK and SkyWest SKYW reported better-than-expected earnings per share and revenues for the third quarter of 2024. SkyWest also inked a fleet-related deal with United Airlines UAL. ALK’s quarterly results included almost 13 days of Hawaiian Airlines’ results, which was acquired on Sept.18.

Allegiant Travel Company ALGT reported a wider-than-expected loss in the third quarter of 2024 due to high costs. European carrier Ryanair Holdings’ RYAAY results were hurt by high costs as well. RYAAY reported lower-than-expected earnings and revenues in second-quarter fiscal 2025 (ended Sept. 30, 2024).

Read the Last Airline Roundup here

Recap of the Recent Most Important Stories

1. Alaska Air’s third-quarter 2024 earnings per share of $2.25 outpaced the Zacks Consensus Estimate of $2.20 and improved 22.9% on a year-over-year basis. Operating revenues of $3.07 billion beat the Zacks Consensus Estimate of $2.98 billion. The top line jumped 8% year over year, with passenger revenues accounting for 91.8% of the top line and increasing 8% on continued air-travel demand recovery.

Passenger revenues totaled $2.82 billion in the reported quarter. On a year-over-year basis, cargo and other revenues of $80 million grew 29%. ALK anticipates fourth-quarter 2024 adjusted EPS between 20 cents and 40 cents.

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

2. SkyWest reported third-quarter 2024 earnings of $2.16, outpacing the Zacks Consensus Estimate of $1.92 and surging more than 100% year over year. Revenues of $912.8 million beat the Zacks Consensus Estimate of $887.5 million and grew 19.1% year over year due to flying contract rate increases. Additionally, SKYW had $19 million of deferred revenues in the reported quarter under its flying contracts.

Revenues from flying agreements (contributing 96.7% to the top line) grew 19.1% year over year to $883.5 million The airline carried 10.3% more passengers in the reported quarter on a year-over-year basis. Departures grew 11.8% year over year. SkyWest also announced that it inked a deal with United Airlines to place 40 CRJ550s under a multi-year contract. Per the deal, SKYW will purchase 11 used CRJ550s and convert 29 of its CRJ700s to CRJ550s.

3. Ryanair’s earnings per share of $2.82 lagged the Zacks Consensus Estimate of $2.92 and declined year over year in second-quarter fiscal 2025. Revenues of $5.56 billion missed the Zacks Consensus Estimate of $5.59 billion. However, the top line improved year over year.

RYAAY’s profit after tax decreased 6% year over year. Traffic grew 9% . Ryanair expects its fiscal 2025 traffic to grow 8.

4. Allegiant reported a third-quarter 2024 loss of $2.02 per share (excluding three cents from non-recurring items), wider than the Zacks Consensus Estimate of a loss of $1.85. The company had reported earnings of 9 cents per share in the year-ago quarter.

Operating revenues of $562.2 million marginally surpassed the Zacks Consensus Estimate of $561.2 million. However, the top line fell 0.6% on a year-over-year basis. For the fourth quarter of 2024, Available Seat Miles or ASM (for scheduled service) are expected to increase 1.5% year over year, and total system ASM is projected to rise 1.5%.

Performance

The following table shows the price movements of the major airline players over the past week and during the last six months.

The NYSE ARCA Airline Index increased 5% to $71.23 over the past five trading days, as all stocks in the table above traded in the green. Over the past six months, the NYSE ARCA Airline Index rose 16%.

What’s Next in the Airline Space?

With the current earnings season almost over for airlines, a handful of carriers are left to report their financial numbers. On the non-earnings front, a few October traffic reports are expected in the coming days.

Zacks Investment Research

Alaska Air Group, Inc. (ALK) reported solid third-quarter 2024 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Quarterly earnings per share (EPS) of $2.25 outpaced the Zacks Consensus Estimate of $2.20 and improved 22.9% on a year-over-year basis. The reported figure met the higher end of the guided range of $2.15-$2.25.

Find the latest EPS estimates and surprises on ZacksEarnings Calendar.

Operating revenues of $3.07 billion beat the Zacks Consensus Estimate of $2.98 billion. The top line jumped 8% year over year, with passenger revenues accounting for 91.8% of the top line and increasing 8% owing to continued recovery in air-travel demand.

Passenger revenues totaled $2.82 billion in the reported quarter. On a year-over-year basis, cargo and other revenues of $80 million grew 29% year over year. Mileage plan other revenues grew 8% to $171 million.

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

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

Given that Hawaiian Airlines was acquired on Sept. 18, 2024, ALK’s quarterly results include almost 13 days of Hawaiian Airlines results.

Other Q3 Details

All comparisons have been presented on a year-over-year basis unless mentioned otherwise.

Revenue per available seat mile (RASM: a key measure of unit revenues) grew 1.3% to 15.48 cents. Yield decreased 0.2% to 16.62 cents.

Reflecting the uptick in air-travel demand, consolidated traffic (measured in revenue passenger miles) grew 8% to 16.97 billion. To cater to this increased demand, capacity (measured in average seat miles) grew 6.8% to 19.84 billion. As traffic outpaced capacity expansion, the consolidated load factor (percentage of seat occupancy) grew 0.9 percentage points to 85.5%. Our estimate is pegged at 83.3%.

In the third quarter, total operating expenses (on a reported basis) grew 4% to $2.73 billion.

Economic fuel price per gallon fell 19.9% to $2.61. The reported figure lies within the guided range of $2.60 to $2.70.

Consolidated operating costs per available seat mile (excluding fuel and special items) grew 6.9% to 10.16 cents.

Liquidity

As of Sept. 30, 2024, Alaska Air had $1.01 billion of cash and marketable securities compared with $1.11 billion at the end of the prior quarter. ALK exited the third quarter of 2024 with long-term debt (net of current portion) of $4.15 billion compared with $2.31 billion at the end of the prior quarter. Debt-to-capitalization ratio was 45%.

ALK generated $318 million of cash from operating activities in the reported quarter. During the third quarter of 2024, ALK repurchased nearly 367,705 shares for $14 million.

Outlook

ALK’s fourth-quarter guidance is inclusive of Hawaiian Airlines. ALK anticipates fourth-quarter 2024 adjusted EPS between 20 cents and 40 cents. The Zacks Consensus Estimate is currently pegged at $1.06.

For the fourth quarter of 2024, Alaska Air anticipates the economic fuel cost per gallon to be $2.55 to $2.65. The company expects available seat miles (a measure of capacity) to increase 1.5% to 2.5% in the fourth quarter of 2024 from the fourth quarter of 2023 actuals. CASM is expected to increase in high single digits. RASM is expected to increase in the mid-single digits.

For 2024, EPS is anticipated to remain above the midpoint of the prior guidance of $3.50 to $4.50 per share (including Hawaiian's results).The Zacks Consensus Estimate of $4.24 lies within the guidance.

Capital expenditures are still expected to be between $1.2 billion and $1.3 billion for 2024.

ALK’s Zacks Rank and Price Performance

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

Over the past three months, shares of ALK have gained 38.7%, outperforming the industry’s growth of 15.4%.

Three-Month Price Comparison