What To Expect From Alaska Air’s Q4 Earnings

by Trefis Team
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Alaska Air Group
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Alaska Air Group (NYSE:ALK) managed to post rather decent earnings in Q3. Despite falling short of the estimates, the company managed to post an earnings per share of $2.14, up by about 3% from last year, while revenues came in a mammoth 35% higher in comparison to the same period last year. It must be noted, however, that the jumps in both EPS and revenue were a product of Virgin’s inclusion in the books. In actuality, investors were not at all happy with how things transpired. The company’s stock fell by about 13% post the earnings call.

  • Operations at Alaska’s subsidiary, Horizon Air, were impacted severely in the last quarter as the airline saw a significant number of its pilots migrate to higher paying mainline opportunities. Due to the lack of pilots, the airline was forced to cancel and/or reschedule a number of flights to match availability. This led to a massive dip in revenues at the subsidiary. While the company has made arrangements to have things at Horizon back on track by Q1 2018, we expect revenues at Horizon to be hurt this quarter.
  • Additionally, the company has faced several issues in its integration with Virgin over the past year. To put this into perspective, one need only look at the RASM figures last quarter. While RASM at Alaska came in relatively flat, RASM at Virgin posted a major 8% drop. CEO Brad Tilden has admitted that integrating Virgin with Alaska has been quite sloppy. While he hopes to have things sorted in the next six to eight months, we can expect to see overall RASM figures continue to be hurt by negative RASM growth at Virgin.

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