Alaska Air Beats Q4 Profit Estimates, Eyes Smaller Q1 Loss Amid Robust Travel Demand

Alaska Air Group (ALK) has reported strong earnings for the fourth quarter of 2024, beating analyst estimates and signaling a robust travel demand. The company's shares have surged 65.8% in 2024, outperforming its industry's 30.3% growth. Let's delve into the key factors driving this growth and assess the company's prospects for the coming year.



Alaska Air's top line has benefited from the uptick in air travel demand, with consolidated traffic (measured in revenue passenger miles) rising 8% to 16.97 billion in the third quarter of 2024. To accommodate this surge in demand, the company increased capacity (measured in available seat miles) by 6.8% to 19.84 billion. As traffic growth outpaced capacity expansion, the consolidated load factor (percentage of seat occupancy) rose by 0.9 percentage points, reaching 85.5%, which surpassed our estimate of 83.3%.

The company's strategic plan, 'Alaska Accelerate,' focuses on generating $1 billion in incremental profit following its merger with Hawaiian Airlines. This plan includes expanding connectivity through a Seattle gateway and long-haul flights, becoming Hawaii's trusted airline with improved services and a dedicated loyalty program, enhancing the travel experience with premium offerings, and diversifying revenues through cargo growth and technology investments. This approach positions ALK for sustainable growth and a better customer experience.



Driven by these positives, the Zacks Consensus Estimate for Alaska Airlines' earnings for the full-year 2024 and full-year 2025 has been revised 12% and 10.4% upward over the past 60 days, respectively. This upward revision in earnings estimates indicates that analysts are increasingly optimistic about the company's financial performance in the coming years.

Other top-ranked stocks from the Zacks Airline industry to consider are American Airlines (AAL) and United Airlines (UAL), both of which currently sport a Zacks Rank #1 (Strong Buy). AAL has an expected earnings growth rate of 46.4% for the current year, while UAL has an expected earnings growth rate of 35.7%. Both companies have an impressive earnings surprise history, with AAL's earnings outpacing the Zacks Consensus Estimate in three of the trailing four quarters and UAL's earnings outpacing the Zacks Consensus Estimate in all four quarters.

In conclusion, Alaska Air's strong earnings performance, robust travel demand, and strategic plan position the company for future growth and profitability. With air travel demand projected to stay robust, ALK stock is likely to maintain its positive performance in the market in the new year as well. However, investors should remain vigilant and monitor the company's progress, as well as the broader economic and industry trends, to make informed investment decisions.