What Is In Store For Alaska Air Group in Q1’19?

by Trefis Team
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Alaska Air Group
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Alaska Airlines (NYSE:ALK) Alaska Air Group is set to report earnings on the 25th of April. With Virgin Airlines now fully integrated, Alaska Airlines may see improved results in the first quarter. Alaska Airlines has said that it expects some headwinds, mainly due to ticket pricing, weighing on customers. This could affect the flow of traffic, which is being outweighed by growth in capacity, in the first quarter, with the airline’s load factor falling. This would affect per unit revenue as well.

We currently have a price estimate of $80 per share, which is higher than the market price. You can use our interactive dashboard What can we expect from Alaska Air Group in Q1’19 to modify key drivers and visualize the impact on ALK’s price estimate.

Key Takeaways for the First Quarter:

-We expect RASM (revenue per average seat mile) to grow by 1-2% during the quarter; this mainly due to weak last-minute pricing on the transcontinental routes. The airline expects improved pricing in the second quarter. We expect that this will no longer be an issue in the second quarter.

-Air fuel costs are expected to rise slightly from $2.04 per gallon to $2.15. While non-fuel costs are expected to decline 4-5% with Virgin now fully integrated.

-We expect revenue to rise from between 7-8% for the quarter. Earnings per share is expected to come in at $0.18, this compared to $0.03 in Q1 2018.

Overall, we expect a relatively moderate first quarter. With issues of pricing to be solved, and RASM growth to pick up pace, in the second quarter. This will help the airline significantly improve cash-flow, and push the company’s earnings per share higher. With improved results we expect the stock to get much closer to our estimates.

 

 

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