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Alaska Air Group (ALK) Posts Q4 Loss, Suffers Revenue Dip Y/Y

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Alaska Air Group (ALK - Free Report) , the parent company of Alaska Airlines, incurred a loss of $2.55 per share (excluding 92 cents from non-recurring items) in the fourth quarter of 2020, narrower than the Zacks Consensus Estimate of a loss of $2.91.

In the year-ago quarter, the company delivered earnings of $1.46 when air-travel demand was strong. The December-quarter’s loss meant that this Seattle, WA-based company suffered losses in each of the four quarters of the coronavirus-scarred 2020.

Revenues at Alaska Air came in at $808 million, surpassing the Zacks Consensus Estimate of $786.6 million. The top line, however, declined 63.7% year over year. Passenger revenues — contributing 81.3% to the top line — were down 68% on a year-over-year basis to $658 million due to weak travel demand.

Other Details

Consolidated traffic, measured in revenue passenger miles, fell 68.7% year over year in the reported quarter. Consolidated capacity (measured in available seat miles) dropped 42.1%. Load factor (percentage of seats occupied by passengers) deteriorated 38.4 points to 45.3% as traffic plunged more than the amount of capacity contraction.

Total revenue per available seat mile (RASM: a key measure of unit revenues) slumped 37.3% year over year to 8.39 cents in the reported quarter. Meanwhile, yield inched up 2% to 15.06 cents.

In the fourth quarter, total operating expenses (on a reported basis) dropped 30% year over year to $1,381 million. Consolidated fuel price (economic) was $1.39 per gallon, tumbling 37.1% year over year. With most of the fleet remaining grounded/under-utilized, fuel gallons consumed were down 45.9% to $117 million. Consolidated cost per available seat mile excluding fuel and special items (non-fuel unit costs) increased 26% to 11.35 cents, mainly due to capacity cuts.

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

As of Dec 31, 2020, the company had $3,346 million in cash and marketable securities compared with $1,521 million at the end of 2019.

This currently Zacks Rank #4 (Sell) company exited the final quarter of 2020 with long-term debt of $2,357 million compared with $1,264 million at the end of 2019. Inclusive of operating leases, debt-to-capitalization ratio was 61% compared with 41% at the end of December 2019.

Moreover, on Jan 15, 2021, the carrier received $266 million of the total amount of $533 million from the U.S. Treasury.  Notably, Alaska Air reached an agreement with the U.S. treasury in January 2021 to receive an extension of the payroll support amounting to $533 million.

Alaska Air’s total liquidity as of Jan 22, 2021 stood at $5.2 billion.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Annual Results

For the full year, the carrier’s loss (on an adjusted basis) came in at $10.17 per share. Revenues tanked 59% year over year to $3.56 billion. The Zacks Consensus Estimate was of a loss of $10.50 per share while the same for revenues was $3.55 billion.

Q1 Outlook

For the first quarter of 2021, the carrier expects capacity (measured in available seat miles) to decline roughly 30% from the comparable reported figure of first-quarter 2019. Revenue passengers are likely to plummet in the 60-65% range during first-quarter 2021 from the level reported in the March quarter of 2019.

Total revenues are also likely to decline in the 60-65% range during first-quarter 2021 from the March-quarter 2019 actuals. Passenger load factor in the quarter is expected in the 40-45% range. Non-fuel unit costs for first-quarter 2021 are likely to increase approximately 20% from the recorded first-quarter 2019 levels.

Sectorial Snapshots

Let’s take a look at some of the other recently released earnings reports from companies within the Zacks Transportation sector.

United Airlines (UAL - Free Report) incurred a loss (excluding 6 cents from non-recurring items) of $7 per share in the fourth quarter of 2020, wider than the Zacks Consensus Estimate of a loss of $6.56. Further, operating revenues of $3,412 million lagged the Zacks Consensus Estimate of $3,420.4 million.

J.B. Hunt Transport Services (JBHT - Free Report) reported earnings of $1.44 per share, beating the Zacks Consensus Estimate of $1.27. Total operating revenues of $2,737.7 million also surpassed the Zacks Consensus Estimate of $2,514.3 million.

Delta Air Lines (DAL - Free Report) incurred a loss (excluding $1.34 from non-recurring items) of $2.53 per share in the fourth quarter of 2020, wider than the Zacks Consensus Estimate of a loss of $2.43. Total revenues of $3,973 million topped the Zacks Consensus Estimate of $3,754.5 million.

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