Alaska Air Group Q4 Earnings: Softening Corporate Demand And Flight Disruptions Weigh On Bottomline

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  • Alaska Air Group, Inc (NYSE: ALK) reported fourth-quarter FY22 operating revenue growth of 31% year-over-year to $2.48 billion, missing the consensus of $2.51 billion.
  • Passenger revenues improved by 32% Y/Y to $2.26 billion.
  • Adjusted EPS of $0.92 missed the consensus of $0.94.
  • The company reported an operating income of $23 million, down 41% Y/Y.
  • Revenue passengers decreased by 12% Y/Y, traffic declined by 8%, capacity reduced by 10% Y/Y, and load factor expanded 180 basis points to 85.5%.
  • Alaska Air held $2.4 billion in cash and equivalents.
  • CEO Ben Minicucci said, “Despite many challenges during the year, we ran one of the best operations, signed five new labor deals, and executed the majority of our single fleet transition.”
  • Alaska Air announced plans to resume stock buyback in early 2023 to offset annual dilution, which is expected to range from $75 million – $100 million.
  • The company retired 10 Airbus A320 aircraft and 9 Q400 aircraft in the fourth quarter. All remaining A20 aircraft has since been retired, and all remaining Q400 aircraft will be retired by the end of January 2023
  • In December, Raymond James highlighted that the airlines noted a slowdown in corporate demand ascribed to the extra week between Thanksgiving and the December holidays.
  • The industry also suffered flight disruption from December 21 – December 31 due to a severe winter storm.
  • Price Action: ALK shares traded lower by 0.75% at $50.67 on the last check Thursday.