• GAAP Net Income: $71 million for Q4 2024; $395 million for full year 2024.
• Adjusted Net Income: $125 million for Q4 2024; $625 million for full year 2024.
• Adjusted EPS: $0.97 for Q4 2024; $4.87 for full year 2024.
• Adjusted Pre-Tax Margin: 7.1% for full year 2024.
• Revenue: $3.5 billion for Q4 2024, up nearly 10% year over year.
• Share Repurchases: $248 million in December; over $300 million for full year 2024.
• Premium Cabin Revenue: Increased by 10% for full year 2024.
• Loyalty Program Cash Remuneration: $2.1 billion in 2024.
• Debt to Cap: 58% at year end 2024.
• Net Debt to EBITDAR: 2.4 times at year end 2024.
• Q1 2025 Guidance: Expected loss per share of $0.50 to $0.70.
• Full Year 2025 EPS Target: More than $5.75.
• CapEx for 2025: $1.4 billion to $1.5 billion.

• Warning! GuruFocus has detected 5 Warning Sign with ALK.

Release Date: January 23, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Alaska Air Group Inc (NYSE:ALK) reported a strong fourth-quarter and full-year GAAP net income of $71 million and $395 million, respectively, with adjusted net income of $125 million and $625 million.
• The company exceeded its guidance with an adjusted EPS of $0.97 for Q4 and $4.87 for the full year 2024.
• ALK aggressively repurchased $248 million in shares during December, fully exhausting its existing program, and launched a new $1 billion share repurchase program in January.
• The acquisition of Hawaiian Airlines has strengthened ALK's strategic assets, including a leading position in a top 25 US hub and a valuable brand.
• ALK's loyalty programs generated $2.1 billion in cash remuneration in 2024, with strong initial demand for its new premium credit card and the Huaka'i by Hawaiian loyalty benefits program gaining traction.

Negative Points

• The four-week grounding of the 9 MAX aircraft negatively impacted ALK's results, preventing it from posting the best margin in the industry.
• ALK expects its Hawaiian assets to be unprofitable in Q1 2025, although a small pretax profit is anticipated from Q2 onwards.
• Fourth-quarter unit costs were up 8.6% year over year, with performance-based pay accruals contributing to the increase.
• ALK's first-quarter earnings are expected to result in a loss per share of $0.50 to $0.70, reflecting normal seasonality but still a material improvement year over year.
• The integration of Hawaiian Airlines is still in progress, with a single operating certificate and unified reservation system expected by the end of 2025.

Q & A Highlights

Q: Can you elaborate on the network reallocation and its importance, particularly the Narita flight and the banking structure at Portland and Seattle? A: Benito Minicucci, CEO, explained that the integration and synergy capture from connecting networks are top priorities. Andrew Harrison, EVP and Chief Commercial Officer, added that with low capacity growth, the focus is on repositioning aircraft to maximize connectivity and replace underperforming capacity with new markets.

Q: How is corporate travel performing, and what are the trends for January? A: Andrew Harrison noted that corporate travel was up 8% in Q4, with a 20% increase in held corporate revenues as of January. The growth is driven by shorter haul West Coast business traffic, indicating a strong outlook.

Q: Can you discuss the high-single-digit RASM guidance and the impact of cargo on this? A: Andrew Harrison stated that both Hawaiian and Alaska assets are performing well on unit revenue. The RASM improvement is attributed to network synergies and connectivity, with March expected to be strong due to a better network setup.

Q: Have you noticed any changes in competitive capacity or behavior after outlining your plan and rebanking efforts? A: Andrew Harrison mentioned minimal changes, with some equipment adjustments by competitors but no significant shifts in industry behavior since the Investor Day.

Q: What are the largest building blocks needed to achieve Hawaiian's future first-quarter profitability? A: Benito Minicucci highlighted the importance of aligning capacity with demand, optimizing aircraft placement, and applying Alaska's operational discipline to Hawaiian's network to improve productivity and profitability.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.