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Alaska Air Group (ALK) Gains on Q4 Earnings, Revenue Beat

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Alaska Air GroupALK , which acquired Virgin America in December last year, performed impressively in the fourth quarter of 2016 reporting better-than-expected earnings per share and revenues. The carrier's earnings of $1.56 per share were 15 cents above the Zacks Consensus Estimate. Moreover, the bottom line expanded 6.85% on a year-over-year basis.

Revenues came in at $1.52 billion, beating the Zacks Consensus Estimate of $1.43 billion. The top line grew 11% on a year-over-year basis. Passenger revenues, which improved 9% on a year-over-year basis, accounted for bulk of the top line.

Operating Statistics

Airline traffic, measured in revenue passenger miles, rose 13.1% year over year to 9,640 million in the final quarter of 2016. Capacity or available seat miles increased 10.3% to 11,407 million. Load factor (percentage of seats filled by passengers) climbed 200 basis points to 84.5%, owing to traffic growth outpaced capacity expansion.

Passenger revenue per available seat mile (PRASM: a key measure of unit revenues) decreased 0.9% year over year to 11.29 cents. While total revenue per available seat mile (RASM) climbed 0.3% in the reported quarter, yield declined 3.3% to 13.36 cents.

Alaska Air Group, Inc. Price, Consensus and EPS Surprise

Alaska Air Group, Inc. Price, Consensus and EPS Surprise | Alaska Air Group, Inc. Quote

Operating Expenses & Income

In the quarter under review, total operating expenses (on a reported basis) rose 14% year over year to $1,283 million. Operating income declined 5% to $241 million from the prior-year quarter. Fuel price (economic) was $1.68 per gallon, up 3.7%. Consolidated unit cost or cost per available seat mile- excluding fuel and special items - decreased marginally to 8.45 cents.

Liquidity

At the end of 2016, this Zacks Rank #2 (Buy) company had $1,580 million in cash and marketable securities compared with $1,328 million at the end of 2015. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

The company exited the year with long-term debt of $2,637 million compared with $569 million at the end of 2015. At the end of 2016, adjusted debt-to-capitalization ratio was 59% compared with 27% at 2015-end.

Dividend Hiked

In a shareholder-friendly move, the carrier announced a 9% hike in its quarterly dividend to 30 cents per share ($1.20 annualized). The dividend hike marks the fourth time that the company has increased the dividend payout, ever since it started paying quarterly dividend in Jul 2013.

The impressive quarterly performance and the dividend hike pleased investors. Consequently, the stock gained in pre-market trading .

Other Important Releases Coming Up

Investors in the broader transportation space keenly await the fourth-quarter earnings reports of Copa Holdings CPA , KNOT Offshore Partners LP KNOP and Expeditors EXPD . While Copa Holdings and KNOT Offshore are scheduled to release results on Feb 15, Expeditors will do the same on Feb 21.

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Copa Holdings, S.A. (CPA): Free Stock Analysis Report

Alaska Air Group, Inc. (ALK): Free Stock Analysis Report

KNOT Offshore Partners LP (KNOP): Free Stock Analysis Report

Expeditors International of Washington, Inc. (EXPD): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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