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Here's Why Investors Should Retain Alaska Air (ALK) Now
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Alaska Air Group, Inc. (ALK - Free Report) is benefiting from its improved air-travel demand and fleet-modernization initiatives.
Factors Favoring ALK
Improvement in air-travel demand bodes well for Alaska Air. The carrier is seeing continued improvement in air-travel demand. On the back of upbeat air-travel demand and favorable pricing, ALK's top line increased 16% year over year in the first half of 2023.
Alaska Air expects to boost its fleet and workforce in 2023 to meet the anticipated high demand. It projects 2023 total revenues to increase 8-10% from 2022's actuals. To match the upbeat demand, capacity in the current year is anticipated to expand in the 11-13% range.
Alaska Air’s fleet-modernization initiatives are encouraging. In March, the company modified its Boeing order to include the bigger MAX 10s and longer-range MAX 8s. The carrier’s contract consists of 145 firm orders and options for Boeing 737-9 aircraft, scheduled for delivery between 2021-2026.
In a bid to modernize its fleet, Alaska Airlines announced in October the decision to exercise its option of purchasing 52 more 737 MAX jets from Boeing. The planes will be delivered between 2024 and 2027. This huge order for Boeing jets will expand its MAX fleet to 146 from 94.
Key Risks
The current scenario of rising fuel costs does not bode well for the airline. Even though fuel price has come down from the highs witnessed earlier, it still remains at an elevated level. Fuel cost per gallon is projected in the range of $2.70-$2.80 for third-quarter 2023.
Zacks Rank
ALK currently carries Zacks Rank #3 (Hold).
Key Picks
Some better-ranked stocks for investors interested in the Zacks Transportation sector are GATX Corporation (GATX - Free Report) and Triton International Limited .
For third-quarter and 2023, GATX’s earnings are expected to register 36.6% and 14.3% growth, respectively, on a year-over-year basis.
Triton, which currently carries a Zacks Rank #2, is benefiting from its consistent efforts to reward shareholders through dividends and share repurchases.
Triton has an impressive liquidity position. Its current ratio (a measure of liquidity) was 3.83 at the end of second-quarter 2023. A current ratio of more than 1 often indicates that the company will be easily paying off its short-term obligations.
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Here's Why Investors Should Retain Alaska Air (ALK) Now
Alaska Air Group, Inc. (ALK - Free Report) is benefiting from its improved air-travel demand and fleet-modernization initiatives.
Factors Favoring ALK
Improvement in air-travel demand bodes well for Alaska Air. The carrier is seeing continued improvement in air-travel demand. On the back of upbeat air-travel demand and favorable pricing, ALK's top line increased 16% year over year in the first half of 2023.
Alaska Air expects to boost its fleet and workforce in 2023 to meet the anticipated high demand. It projects 2023 total revenues to increase 8-10% from 2022's actuals. To match the upbeat demand, capacity in the current year is anticipated to expand in the 11-13% range.
Alaska Air’s fleet-modernization initiatives are encouraging. In March, the company modified its Boeing order to include the bigger MAX 10s and longer-range MAX 8s. The carrier’s contract consists of 145 firm orders and options for Boeing 737-9 aircraft, scheduled for delivery between 2021-2026.
In a bid to modernize its fleet, Alaska Airlines announced in October the decision to exercise its option of purchasing 52 more 737 MAX jets from Boeing. The planes will be delivered between 2024 and 2027. This huge order for Boeing jets will expand its MAX fleet to 146 from 94.
Key Risks
The current scenario of rising fuel costs does not bode well for the airline. Even though fuel price has come down from the highs witnessed earlier, it still remains at an elevated level. Fuel cost per gallon is projected in the range of $2.70-$2.80 for third-quarter 2023.
Zacks Rank
ALK currently carries Zacks Rank #3 (Hold).
Key Picks
Some better-ranked stocks for investors interested in the Zacks Transportation sector are GATX Corporation (GATX - Free Report) and Triton International Limited .
GATX, which presently carries a Zacks Rank #2 (Buy), has strengthened its railcar leasing operations. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
For third-quarter and 2023, GATX’s earnings are expected to register 36.6% and 14.3% growth, respectively, on a year-over-year basis.
Triton, which currently carries a Zacks Rank #2, is benefiting from its consistent efforts to reward shareholders through dividends and share repurchases.
Triton has an impressive liquidity position. Its current ratio (a measure of liquidity) was 3.83 at the end of second-quarter 2023. A current ratio of more than 1 often indicates that the company will be easily paying off its short-term obligations.