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]

Financial Performance - Alaska Air Group reported a total operating revenue of $3.137 billion for Q1 2025, a 41% increase compared to $2.232 billion in Q1 2024 [24] - The company generated an operating cash flow of $459 million in the first quarter [20] - The net loss for Q1 2025 was $166 million, or $1.35 per share, compared to a net loss of $132 million, or $1.05 per share, in Q1 2024 [20][24] Operational Highlights - Capacity (ASMs) increased by approximately 3.9% year-over-year, exceeding prior expectations [5][6] - Revenue passenger miles (RPMs) grew by 37.8% year-over-year, reaching 17.257 billion [30] - The load factor for the quarter was 81.3%, slightly down from 81.4% in the previous year [30] Cost and Efficiency - Unit costs increased by 2.1% year-over-year, which was in line with expectations [7] - Economic fuel cost per gallon was reported at $2.61, down 15.3% from $3.08 in Q1 2024 [30] - The adjusted pretax margin improved to (4.5)% from (7.0)% year-over-year [20][40] Strategic Initiatives - The Alaska Accelerate plan aims to deliver $1 billion in incremental profit by 2027, with initial progress reported [2][3] - The integration of Hawaiian Airlines is yielding synergies, with Hawaiian unit revenue increasing by 8.8% year-over-year [8] - The company ratified new collective bargaining agreements with flight attendants, enhancing employee engagement [20] Future Outlook - For Q2 2025, the company anticipates a revenue impact of approximately 6 points due to recent demand softness [9] - Despite economic uncertainties, the company expects to remain solidly profitable in 2025 [13] - Full-year guidance for 2025 will be updated later in the year as the company assesses various scenarios [13]

Core Viewpoint - Alaska Airlines has warned of a decline in earnings for the second quarter due to softer travel demand, reflecting a broader trend among airlines experiencing weaker-than-expected bookings [1][2]. Group 1: Earnings Forecast and Performance - The company forecasts a 6-percentage point headwind in unit revenue due to softer demand, expecting second-quarter unit revenue to be flat to down as much as 6% year-over-year [1]. - Adjusted per-share earnings are anticipated to be between $1.15 and $1.65, significantly lower than the $2.47 per share forecasted by Wall Street analysts [1]. - In the first quarter, Alaska Airlines reported a net loss of $166 million, an increase from a loss of $132 million a year ago, with revenue exceeding $3.1 billion, up 41% year-over-year but below analysts' expectations [3][5]. Group 2: Revenue and Market Conditions - The airline's unit revenue rose by 5% in the first quarter compared to the previous year, outperforming larger rivals in domestic unit sales [2]. - Despite the economic uncertainty, the company expects to remain profitable even if revenue faces pressure in the second half of the year [2]. - The CFO noted that while customers are still booking trips, they are doing so at lower-than-expected fares, indicating a shift in market dynamics [2][3]. Group 3: Adjusted Loss and Analyst Expectations - Adjusting for one-time items, Alaska reported a loss of 77 cents per share for the three months ended March 31, which was below analysts' estimates of a 75 cents loss [4][5]. - Revenue for the first quarter was reported at $3.14 billion, slightly below the expected $3.17 billion [5].

Financial Performance - Alaska Air Group reported a total operating revenue of $3.137 billion for Q1 2025, a 41% increase compared to $2.232 billion in Q1 2024[22]. - The adjusted net loss for Q1 2025 was $95 million, or $0.77 per share, compared to a net loss of $116 million, or $0.92 per share, in Q1 2024[11]. - Total operating revenue for the three months ended March 31, 2025, was $3,137 million, a 9% increase from $2,877 million in the same period of 2024[45]. - Passenger revenue increased to $2,808 million, up 9% from $2,585 million year-over-year[45]. - The operating loss for the three months ended March 31, 2025, was $197 million, a 39% improvement from a loss of $325 million in the same period of 2024[45]. - The company reported a net loss of $166 million in Q1 2025, compared to a net loss of $132 million in Q1 2024[26]. Cash Flow and Liquidity - The company generated operating cash flow of $459 million in Q1 2025 and held $2.5 billion in unrestricted cash and marketable securities as of March 31, 2025[15]. - Net cash provided by operating activities was $459 million in Q1 2025, compared to $292 million in Q1 2024, an increase of 57.1%[26]. - Adjusted net debt decreased to $3,812 million from $3,918 million as of December 31, 2024[39]. - The debt-to-capitalization ratio remained stable at 58% for both March 31, 2025, and December 31, 2024[39]. Capacity and Operations - Capacity (ASMs) increased by approximately 3.9% in Q1 2025, exceeding prior expectations of 2.5% to 3.5% growth[5]. - Revenue passengers increased by 34.6% to 13,159,000 in Q1 2025 from 9,774,000 in Q1 2024[31]. - Revenue passenger miles (RPMs) increased by 4.0% to 17,257 million from 16,597 million in the previous year[45]. - The load factor for the three months ended March 31, 2025, was 81.3%, slightly up from 81.2% in the same period of 2024[45]. Expenses and Cost Management - Total operating expenses increased to $3,334 million in Q1 2025, up from $2,398 million in Q1 2024, a rise of 39.1%[36]. - Total operating expenses rose to $3,334 million, a 4% increase compared to $3,202 million in the prior year[45]. - The company reported a 10% decrease in aircraft fuel expenses, totaling $681 million compared to $759 million in the prior year[45]. - Economic fuel cost per gallon decreased by 15.3% to $2.61 in Q1 2025 from $3.08 in Q1 2024[31]. Strategic Initiatives - Alaska Air Group aims to deliver $1 billion in incremental profit by 2027 as part of its Alaska Accelerate strategic plan[2]. - The integration of Hawaiian Airlines is showing strong initial progress, with Hawaiian unit revenue increasing by 8.8% year-over-year[9]. - The company ratified a three-year collective bargaining agreement with over 6,900 flight attendants, enhancing employee engagement and benefits[15]. Shareholder Actions - The company repurchased 1.8 million shares for approximately $107 million in Q1 2025, with year-to-date repurchases totaling $149 million[15]. - The average full-time equivalent employees (FTEs) increased by 29.4% to 29,773 in Q1 2025 from 23,013 in Q1 2024[31].