Alaska Air (ALK) Up 8.1% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Alaska Air Group (ALK). Shares have added about 8.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Alaska Air due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Alaska Air Beats on Earnings in Q2

ALK's second-quarter 2025 earnings of $1.78 per share beat the Zacks Consensus Estimate of $1.56 per share but declined 30.2% year over year.

Operating revenues of $3.70 billion surpassed the Zacks Consensus Estimate of $3.65 billion. The top line jumped 27.8% year over year, with passenger revenues accounting for 90.5% of the top line and increasing 27% owing to consistency in air-travel demand.

Passenger revenues totaled $3.35 billion in the reported quarter. On a year-over-year basis, cargo and other revenues of $139 million grew 93%. Loyalty program other revenues grew 21% year over year to $210 million.

Other Details of ALK’s Q2 Earnings

All comparisons have been presented on a year-over-year basis unless mentioned otherwise.

Revenue per available seat mile (RASM: a key measure of unit revenues) fell 3.3% to 15.39 cents. Yield decreased 4% to 16.62 cents.

Reflecting the uptick in air-travel demand, consolidated traffic (measured in revenue passenger miles) grew 31.8% to 20.17 billion. To cater to this increased demand, capacity (measured in average seat miles) rose 32.2% to 24.05 billion. Although traffic improved on a year-over-year basis, it failed to outpace capacity expansion. As a result, the load factor (percentage of seats filled by passengers) fell to 83.9% from 84.1% in the prior-year period. Our estimate is pegged at 88.8%.

In the second quarter, total operating expenses (on a reported basis) grew 33% to $3.42 billion. Economic fuel price per gallon fell 15.8% to $2.39.

Consolidated operating costs per available seat mile (excluding fuel and special items) grew 10.2%.

Liquidity

As of June 30, 2025, Alaska Air had $750 million of cash and cash equivalents compared with $1.04 billion at the end of the prior quarter. ALK exited the second quarter of 2025 with long-term debt (net of current portion) of $4.44 billion compared with $4.29 billion at the end of the prior quarter. Debt-to-capitalization ratio was 60% at the end of the reported quarter.

During the second quarter, ALK repurchased 8.7 million shares for $428 million.

ALK’s Outlook

ALK anticipates third-quarter 2025 adjusted earnings per share in the range of $1.00-$1.40. The Zacks Consensus Estimate is currently pegged at $1.55 per share.

For the third quarter of 2025, the company expects available seat miles (a measure of capacity) to be down 1% from the year-ago quarter. RASM is expected to remain flat to up low single digits. For third-quarter 2025, adjusted CASM is expected to be up to mid to high single digits.

ALK anticipates 2025 adjusted earnings per share to be more than $3.25. For 2025, ALK expects available seat miles to be up 2% from 2024 actuals. RASM is expected to remain flat to up low single digits. For 2025, adjusted CASM is expected to be up in mid-single digits.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -13.91% due to these changes.

VGM Scores

At this time, Alaska Air has a average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock has a grade of A on the value side, putting it in the top quintile for value investors.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Alaska Air has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Alaska Air is part of the Zacks Transportation - Airline industry. Over the past month, Delta Air Lines (DAL), a stock from the same industry, has gained 5.7%. The company reported its results for the quarter ended June 2025 more than a month ago.

Delta reported revenues of $16.65 billion in the last reported quarter, representing a year-over-year change of -0.1%. EPS of $2.10 for the same period compares with $2.36 a year ago.

Delta is expected to post earnings of $1.48 per share for the current quarter, representing a year-over-year change of -1.3%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.8%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Delta. Also, the stock has a VGM Score of B.

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This article originally published on Zacks Investment Research (zacks.com).

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