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Alaska Air (ALK) Q2 Earnings Surpass, Q3 RASM View Upbeat
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Alaska Air Group, Inc. (ALK - Free Report) delivered second-quarter 2019 adjusted earnings per share (excluding 6 cents from non-recurring items) of $2.17, beating the Zacks Consensus Estimate of $2.11. Moreover, the bottom line improved substantially year over year on higher revenues.
Revenues came in at $2,288 million, above the Zacks Consensus Estimate of $2,282 million. The top line also rose year over year. Passenger revenues — accounting for a bulk (92.3%) of the top line — were up 6% on a year-over-year basis.
Operating Statistics
Airline traffic, measured in revenue passenger miles, inched up 1.1% year over year in the reported quarter. Capacity or available seat miles expanded 0.9%. Load factor (percentage of seats occupied by passengers) improved 20 basis points to 86.2% as traffic growth outpaced capacity expansion in the quarter under review.
Total revenue per available seat mile (RASM: a key measure of unit revenues) increased 5.2% year over year to 13.48 cents in the quarter under discussion. Meanwhile, yield climbed 4.6% to 14.43 cents.
Alaska Air Group, Inc. Price, Consensus and EPS Surprise
In the quarter under review, total operating expenses were up 2% year over year to $1,924 million. Operating income jumped 34% from the prior-year quarter to $364 million. Fuel price (economic) was $2.27 per gallon, down 1.3%.
Consolidated cost per available seat mile — excluding fuel and special items — nudged up 2.3% to 8.33 cents.
Alaska Air exited the quarter with long-term debt of $1,538 million compared with $1,617 million at the end of 2018. Adjusted debt-to-capitalization ratio was 45% compared with 47% in December 2018. The carrier repurchased 408,665 shares worth approximately $25 million during the first half of the year.
Q3 Outlook
The company envisions capacity to rise approximately 3% year over year in the third quarter. Additionally, RASM is estimated to ascend in the 2-5% range in the period. However, non-fuel unit costs (excluding special items) are projected to increase approximately 5% year over year. This includes a $34-million expected increase in labor-related costs. Meanwhile, economic fuel cost is forecast to decline 5.2% year over year to $2.21 in the current quarter.
2019 Outlook
For the full year, capacity is estimated to expand approximately 2.1% (prior view: increase of 2%) while non-fuel unit costs (excluding special items) are expected to rise nearly 2.2% compared with an increase of 2.1% expected earlier. The view includes costs associated with labor deal ratification and other employee-related costs. Also, capital expenditures are anticipated to be $725 million in the ongoing year, lower than $750 million estimated previously. Meanwhile, effective tax rate is still predicted to be approximately 26% in the year.
Upcoming Releases
Investors interested in the broader Transportation sector are keenly awaiting second-quarter earnings reports from key players, such as Expeditors International of Washington, Inc. (EXPD - Free Report) , Air Lease Corporation (AL - Free Report) and Hertz Global Holdings, Inc (HTZ - Free Report) . While Expeditors and Hertz will report financial numbers on Aug 6, Air Lease will announce the same on Aug 8.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.
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Alaska Air (ALK) Q2 Earnings Surpass, Q3 RASM View Upbeat
Alaska Air Group, Inc. (ALK - Free Report) delivered second-quarter 2019 adjusted earnings per share (excluding 6 cents from non-recurring items) of $2.17, beating the Zacks Consensus Estimate of $2.11. Moreover, the bottom line improved substantially year over year on higher revenues.
Revenues came in at $2,288 million, above the Zacks Consensus Estimate of $2,282 million. The top line also rose year over year. Passenger revenues — accounting for a bulk (92.3%) of the top line — were up 6% on a year-over-year basis.
Operating Statistics
Airline traffic, measured in revenue passenger miles, inched up 1.1% year over year in the reported quarter. Capacity or available seat miles expanded 0.9%. Load factor (percentage of seats occupied by passengers) improved 20 basis points to 86.2% as traffic growth outpaced capacity expansion in the quarter under review.
Total revenue per available seat mile (RASM: a key measure of unit revenues) increased 5.2% year over year to 13.48 cents in the quarter under discussion. Meanwhile, yield climbed 4.6% to 14.43 cents.
Alaska Air Group, Inc. Price, Consensus and EPS Surprise
Alaska Air Group, Inc. price-consensus-eps-surprise-chart | Alaska Air Group, Inc. Quote
Operating Expenses & Income
In the quarter under review, total operating expenses were up 2% year over year to $1,924 million. Operating income jumped 34% from the prior-year quarter to $364 million. Fuel price (economic) was $2.27 per gallon, down 1.3%.
Consolidated cost per available seat mile — excluding fuel and special items — nudged up 2.3% to 8.33 cents.
Liquidity & Buybacks
At the end of the reported quarter, this Zacks Rank #2 (Buy) company had $1,627 million in cash and marketable securities compared with $1,236 million at the end of 2018. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Alaska Air exited the quarter with long-term debt of $1,538 million compared with $1,617 million at the end of 2018. Adjusted debt-to-capitalization ratio was 45% compared with 47% in December 2018. The carrier repurchased 408,665 shares worth approximately $25 million during the first half of the year.
Q3 Outlook
The company envisions capacity to rise approximately 3% year over year in the third quarter. Additionally, RASM is estimated to ascend in the 2-5% range in the period. However, non-fuel unit costs (excluding special items) are projected to increase approximately 5% year over year. This includes a $34-million expected increase in labor-related costs. Meanwhile, economic fuel cost is forecast to decline 5.2% year over year to $2.21 in the current quarter.
2019 Outlook
For the full year, capacity is estimated to expand approximately 2.1% (prior view: increase of 2%) while non-fuel unit costs (excluding special items) are expected to rise nearly 2.2% compared with an increase of 2.1% expected earlier. The view includes costs associated with labor deal ratification and other employee-related costs. Also, capital expenditures are anticipated to be $725 million in the ongoing year, lower than $750 million estimated previously. Meanwhile, effective tax rate is still predicted to be approximately 26% in the year.
Upcoming Releases
Investors interested in the broader Transportation sector are keenly awaiting second-quarter earnings reports from key players, such as Expeditors International of Washington, Inc. (EXPD - Free Report) , Air Lease Corporation (AL - Free Report) and Hertz Global Holdings, Inc (HTZ - Free Report) . While Expeditors and Hertz will report financial numbers on Aug 6, Air Lease will announce the same on Aug 8.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.
See 7 breakthrough stocks now>>