Alaska Air Incurs Loss in Q1, Misses Revenue Estimates

Alaska Air Group, Inc. (ALK) reported first-quarter 2025 loss of 77 cents per share, wider than  the Zacks Consensus Estimate of a loss of 72 cents. In the year-ago reported quarter, the company had incurred a loss of 92 cents per share.

Operating revenues of $3.14 billion missed the Zacks Consensus Estimate of $3.16 billion. The top line jumped 41% year over year, with passenger revenues accounting for 89.5% of the top line and increasing 40% owing to consistency in air-travel demand.

Passenger revenues totaled $2.81 billion in the reported quarter. On a year-over-year basis, cargo and other revenues of $122 million grew 91%. Loyalty program other revenues grew 26% year over year to $207 million.

Alaska Airlines’ chief executive officer, Ben Minicucci, stated, “Amid the economic uncertainty, our teams controlled what they can control and delivered results that strengthen our foundation for the long term. We’re growing scale, relevance and loyalty in our hubs, we’re already recognizing synergies from the combination with Hawaiian Airlines, and our employees have never been more engaged and excited about our future. Between the progress on our Alaska Accelerate strategic plan and the resilient business model we’ve built over decades, Alaska is well positioned to thrive in the years ahead.”

Other Details of ALK’s Q1 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) grew 1.9% to 14.79 cents. Yield increased 1.8% to 16.28 cents.

Reflecting the uptick in air-travel demand, consolidated traffic (measured in revenue passenger miles) grew 37.8% to 17.25 billion. To cater to this increased demand, capacity (measured in average seat miles) rose 38% to 21.21 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 81.3% from 81.4% in the prior-year period. Our estimate is pegged at 85%.

In the first quarter, total operating expenses (on a reported basis) grew 39% to $3.33 billion.

Economic fuel price per gallon fell 15.3% to $2.61, as moderating crude oil prices were offset by elevated West Coast refining margins.

Consolidated operating costs per available seat mile (excluding fuel and special items) grew 2.5% as disciplined non-fuel cost performance offset higher performance-based pay accruals and better completion rates drove higher capacity.

Liquidity

As of March 31, 2025, Alaska Air had $1.04 billion of cash and cash equivalents compared with $1.20 billion at the end of prior quarter. ALK exited the first quarter of 2025 with long-term debt (net of current portion) of $4.29 billion compared with $4.49 billion at the end of the prior quarter. Debt-to-capitalization ratio was 58% at the end of the reported quarter.

During the first quarter, ALK repurchased 1.8 million shares for almost $107 million.

ALK’s Outlook

Although overall bookings seem to stabilize in the near future, ALK’s guidance implies an almost 6-point revenue impact in the second quarter owing to recent demand softness. Consistent with previous commentary and expectations, the second quarter is likely to witness maximum cost pressure, while unit costs are expected to improve sequentially through the second half of the year.

ALK anticipates first-quarter 2025 adjusted earnings per share in the range of $1.15 to $1.65. The Zacks Consensus Estimate is currently pegged at $2.52 per share.

The company expects available seat miles (a measure of capacity) to increase 2% to 3% in the second quarter of 2025 from the second quarter of 2024 actuals. RASM is expected to remain flat to down low single digits. CASM is expected to be up to mid to high single digits.

Given recent economic uncertainty and volatility, ALK is not providing an update to its full year 2025 guidance. ALK is analyzing multiple situations and anticipates being solidly profitable in 2025, even if revenue remains pressured throughout the second half of the year. Apart from the softer macroeconomic outlook, areas of ALK’s business that are within the company’s control are performing well and are in line with its previous expectations. ALK is hopeful of providing further updates to full-year guidance later this year.

We note that another player from the Zacks Airline industry, JetBlue Airways Corporation JBLU, will report its first-quarter earnings numbers later this month. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

JetBlue is a low-cost airline, headquartered in Long Island City, NY. JBLU currently has an Earnings ESP of +2.33% and a Zacks Rank #3 (Hold). The company is slated to report first-quarter 2025 results on April 29.

Low fuel costs are likely to have aided JBLU’s bottom line in the to-be-reported quarter. JBLU beat the Zacks Consensus Estimate in each of the last four quarters. The average beat is 62.22%.

ALK’s Zacks Rank

Currently, ALK carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Q1 Performances of Some Other Airline Companies

United Airlines

United Airlines’ UAL first-quarter 2025 earnings per share (excluding 25 cents from non-recurring items) of 91 cents surpassed the Zacks Consensus Estimate of 75 cents. In the year-ago quarter, the Chicago-based airline reported a loss of 15 cents per share. 

Operating revenues of $13.21 billion fell marginally short of the Zacks Consensus Estimate of $13.22 billion. The top line increased 5.4% year over year despite the tariff-induced slowdown in domestic air travel demand. Passenger revenues (which accounted for 89.7% of the top line) rose 4.8% to $11.9 billion. UAL flights transported 40,806 passengers in the first quarter, up 3.8% year over year.

Delta Air Lines

Delta Air LinesDAL reported first-quarter 2025 earnings (excluding 9 cents from non-recurring items) of 46 cents per share, which surpassed the Zacks Consensus Estimate of 40 cents. Earnings increased 2.2% on a year-over-year basis due to low fuel costs.

Revenues in the March-end quarter were $14.04 billion, surpassing the Zacks Consensus Estimate of $13.81 billion and increasing 2.1% on a year-over-year basis. Adjusted operating revenues (excluding third-party refinery sales) rose 3.3% year over year to $13 billion.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research