Alaska Airlines Expected To Outperform On The Back Of Strong Earnings

by Trefis Team
Alaska Air Group
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Alaska Airlines (NYSE:ALK) reports earnings on 24th of January, and is once again expected to beat estimates. Air traffic during the Thanksgiving, and Christmas holiday periods, is expected to play a strong role in the quarter. With fuel costs falling by 40% in the quarter, Alaska expects that it will see its earnings come in higher. With revenue per available seat mile rising by at much as 5.1% for the quarter. This has led analysts to be quite bullish on the stock.

We currently have a price estimate of $70 per share, which is 11% higher than the market price. You can use our interactive dashboard Alaska Q4 2018 to modify key drivers and visualize the impact on ALK’s price estimate.

But the airline does have some worrisome aspects, with Alaska’s load factor expected to be lower than the previous quarter. Continued expansion of capacity, and addition of new routes, may also weigh on earnings for the quarter. Regardless, any headwind from these factors is expected to be minimal.

The airline’s management has done well to improve the airlines fortunes. The addition of new routes with better efficiency, and unit economics, combined with improvements to its fleet of aircraft, is expected to help the airline achieve better results for the quarter.

Overall, the airline is well placed for the quarter. We believe there is a high likelihood, that there will be an earnings beat, with revenue expected to come in at $2.2 billion and earnings per share expected to come in at $1.80. There are very few factors that are negative for the quarter. Therefore the stock may move to the upside for the quarter.



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