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Alaska Air predicts strong earnings growth, shares gain

EditorFrank DeMatteo
Published 10/12/2024, 12:40
© Reuters.
ALK
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Shares of Alaska Air Group, Inc. (NYSE:ALK) saw a notable rise, up 7% in pre-open trading Tuesday, following the company's forecast that it expects to achieve an Earnings Per Share (EPS) of at least $5.75 by 2025, surpassing the consensus estimate of $5.44. The airline further outlined an ambitious growth strategy, Alaska Accelerate, during its 2024 Investor Day, which took place at 1 p.m. Eastern time today in New York City.

The company, which recently acquired Hawaiian Airlines, announced its goal to drive double-digit profit margins between 11-13% and increase EPS to a minimum of $10 by 2027. Alaska Air Group also revised its acquisition synergy estimates, now anticipating at least $500 million by 2027.

As part of its expansion plans, Alaska Air will launch a new global gateway from Seattle, introducing nonstop routes to Tokyo Narita (NRT) and Seoul Incheon (ICN). The airline aims to extend its reach to at least 12 international widebody destinations by 2030.

In addition to route expansion, Alaska Air Group is set to introduce a premium credit card with top-tier benefits, targeting the global traveler and supporting the airline's growing network.

Ben Minicucci, CEO of Alaska Air Group, expressed optimism about the company's direction, stating, "There has never been a more exciting time to be a part of Alaska Air Group. We have built a winning business model that has enabled us to outperform the industry over the past two decades. Now, with the combination with Hawaiian Airlines, we will transform our business and solidify our competitive advantage for years to come."

The Alaska Accelerate strategy is designed to connect guests to the world through an expanded network, become Hawai'i's trusted airline, deliver an exceptional travel experience, and diversify the company's future. Significant investments will be made to enhance commercial performance and achieve medium-term financial targets.

Alaska Accelerate will focus on blending Alaska and Hawaiian's route networks, optimizing connections, and deepening relevance for guests. The combined airline now operates over 1,400 daily flights to more than 140 cities and offers access to over 1,200 destinations globally with partners and through the oneworld Alliance.

For Hawai'i residents, the merger promises greater connectivity and a dedicated loyalty program, Huakai'i by Hawaiian. Alaska Air Group also plans to invest in airport infrastructure, expand premium seating, introduce a new loyalty platform, and grow revenue across various business segments, including cargo and technology innovations.

The acceleration strategy is expected to yield $1 billion in incremental profit, achieve a minimum EPS of $10, and maintain pretax profit margins between 11-13%, without margin dilution in the first year post-merger.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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