Yahoo Finance Alaska Air Group Inc (ALK) (Q1 2024) Earnings Call Transcript Highlights: Navigating Challenges ...
GAAP Net Loss: $132 million for Q1 2024.
Adjusted Net Loss: $116 million for Q1 2024, excluding special items and mark-to-market fuel hedge adjustments.
Revenue: Record first quarter revenues of $2.2 billion, up 1.6% year-over-year.
Capacity: Down 2.1% year-over-year, with a 5.5 point impact from fleet grounding.
Unit Revenue: Up 3.8% year-over-year; would have been up 5% excluding grounding effects.
Premium Cabin Revenue: First and Premium Class revenues up 4% and 11%, respectively.
Adjusted EPS Guidance: Revised from $3.25 to $5.25 for the full year.
Fuel Price Per Gallon: $3.08, with West Coast refining margins noted as a unique headwind.
Total Liquidity: $2.8 billion as of March 31.
Debt Repayments: Approximately $100 million for Q1; expected $50 million for Q2.
Unit Costs: Up 11.2% year-over-year, 6 points directly attributable to fleet grounding.
CapEx Guidance: Revised to $1.2 billion to $1.3 billion for the year, down from previous $1.4 billion to $1.5 billion.
Expected Full Year Capacity Growth: Below 3% due to fewer aircraft deliveries.
Release Date: April 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Shane, I know you're not guiding to CASM, but if I were to just think about 1Q being up 3% on 3.5% capacity. Are there any kind of puts and takes you would call out for 2Q, whereby we wouldn't see kind of CASM stepped down nicely given you're growing at 6%? And then similarly, as I think about the back half as growth comes down, I would expect CASM to maybe flex back up. Is that a fair assessment? A: Andrew, yes, I think that's the right contour that we're expecting to see this year. We'll see a decent improvement in unit cost in the second quarter, given the growth profile of the company. And as you mentioned, growth slows down in the back half of the year, and we'll probably see a little more pressure in the back half of the year again on unit costs.
Q: That's great. And then just a follow-up for Andrew. I appreciate all the color you gave on corporate travel. Do you know what percentage of your revenues today are corporate and how that compares to pre-pandemic? And any color you can give us just in terms of what the RASM premium would be on corporate, say, versus leisure travel? A: Yes. Thanks, Andrew. We don't disclose that sort of information. But I will tell you that we see continued improvement in strength in our corporate position, the business that is coming our way.
Q: Just a question with respect to the way we should think about the second half of the year. So second quarter continues kind of the first quarter strength? And then how are you thinking third quarter versus second quarter? A: Yes. Helane, yes, we're seeing the same thing. I think August and the return of schools and just the exposure of our network across different geographies. June is becoming the single strongest month. And so what you'll see here is we move capacity around to accommodate that. So we feel pretty good about getting ahead of that mix.
Q: This is Laura on for Savi. What's the general environment that you're assuming for the second half of the year that's reflected in your full year EPS guide? A: Yes. Look, I think the second half of the year, we expect to continue to be strong and stable. We view it right now, we think it's going to be consistent with what we're seeing today.
Q: So just on the closing commentary. Your comments on the strength of close-in was particularly notable because some of your competitors have been having some challenges with close-end strength or weakness, actually. So are you doing something differently, as the strength idiosyncratic to you as the weakness idiosyncratic to them? If you can unpack that, that would be great. A: I can't specifically speak to other carriers. What I can tell you sitting here looking into April. Demand is coming in very nicely with double-digit increases in unit revenues year-over-year, as we move through the month of April.
Q: Can you talk a little bit about what you're seeing in Hawaii how you're thinking about the recovery in Maui and your capacity recovery there? And what you're seeing competitively, any changes there? A: Yes, Duane, Yes. So on Hawaii, actually, we were very pleasantly surprised as far as just the general framework and strength of Hawaii in general. That said, I think our capacity was down close to 40% out of Maui in total, still going to be down 20% as we move through.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
