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Alaska Air Group (ALK) Q3 Earnings, Revenues Miss Estimates

Alaska Air Group ALK reported third-quarter earnings (excluding 10 cents from non-recurring items)of $2.24 per share, which fell short of the Zacks Consensus Estimate of $2.25. However, the bottom line inched up 1.8% on a year-over-year basis.

Revenues came in at $2,120 million, below the Zacks Consensus Estimate of $2,166.2 million. The top line, however, rallied 35.4% on a year-over-year basis. Passenger revenues which accounted for bulk of the top line (86%), improved 38% on a year-over-year basis.

The below-par performance disappointed investors. Consequently, shares of the company were down in early trading.

Operating Statistics

Airline traffic, measured in revenue passenger miles, rose 43.8% year over year to 13,811 million in the reported quarter. Capacity or available seat miles surged 44.2% to 16,164 million. Load factor (percentage of seats filled by passengers) decreased 20 basis points to 85.4% owing to capacity expansion outpacing traffic growth.

Passenger revenue per available seat mile (PRASM: a key measure of unit revenues) decreased 4.2% year over year to 11.29 cents. Total revenue per available seat mile (RASM) also declined 6.1% to 13.12 cents in the reported quarter, while yield declined 4.1% to 13.21 cents.

Operating Expenses & Income

In the quarter under review, total operating expenses rose 44% year over year to $1,681 million. Operating income increased 10% to $439 million from the prior-year quarter. Fuel price (economic) was $1.80 per gallon, up 13.9%. Consolidated unit cost or cost per available seat mile — excluding fuel and special items — decreased 2.7% to 7.98 cents.

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

 

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

Liquidity

At the end of the quarter, this Zacks Rank #5 (Strong Sell) company had $1,740 million in cash and marketable securities compared with $1,580 million at the end of 2016. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Alaska Air Group exited the quarter with long-term debt of $2,367 million compared with $2,645 million at the end of 2016. At the end of the quarter, adjusted debt-to-capitalization ratio was 53% compared with 59% at 2016-end. In fact, the carrier paid a dividend of 30 cents per share in the third quarter, up 9% year over year.

Upcoming Releases

Investors interested in the broader Transportation sector are keenly awaiting third-quarter earnings reports from key players like American Airlines Group, Inc. AAL, Southwest Airlines Company LUV and Union Pacific Corp. UNP. All are scheduled to report respective earnings numbers on Oct 26.

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Southwest Airlines Company (LUV): Free Stock Analysis Report
 
American Airlines Group, Inc. (AAL): Free Stock Analysis Report
 
Alaska Air Group, Inc. (ALK): Free Stock Analysis Report
 
Union Pacific Corporation (UNP): Free Stock Analysis Report
 
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