ALASKA AIR GROUP, INC.

Recommendation history

• 2025-12-04HoldHold: Alaska’s recovery is improving, with bookings nearly back to pre-shutdown levels, Hawaiian near break-even through Q2–Q3, and premium-card authorizations already multiples of plan. However, management conceded that macro headwinds removed roughly $3 of the buffer behind its $10 2027 EPS goal, while the remaining bridge depends on unquantified synergies, execution, and new profit initiatives; there is no formal 2026 guidance yet.
• Q2 2025BuyBuy: Alaska delivered Q2 adjusted EPS of $1.78, Hawaiian returned to profitability, and management raised confidence in at least $3.25 of 2025 adjusted EPS despite a $0.10 Q3 IT-outage hit. The bull case is credible revenue and synergy execution—premium revenue +5%, Hawaiian revenue +17%, and $1 billion of targeted incremental profit— but the $10 2027 EPS ambition still depends on a recent, close-in demand rebound while unit costs rose 6.5% and integration remains unfinished.
• 2024-12-10HoldHold: Alaska Air Group laid out a credible but execution-heavy path to 11%-13% margins and more than $10 EPS by 2027, underpinned by at least $500 million of Hawaiian synergies, $200 million expected in 2025, and 30% EPS accretion in 2025. The upside from loyalty, premium products, Seattle international expansion, and cargo is meaningful, but analysts correctly highlighted integration, labor, competitive-response, and low-growth CASM risks; the valuation needs successful delivery rather than merely the plan.
• Q2 2024HoldHold: Alaska delivered record Q2 revenue of $2.9 billion, $2.55 adjusted EPS, and a strong 15.8% adjusted pretax margin, supported by premium-cabin and corporate demand. However, unit revenue fell 3.7%, management cut full-year EPS guidance by $0.25 at the midpoint, and Q3 faces high-single-digit unit-cost pressure, softer domestic fares, Boeing delivery constraints, and DOJ uncertainty around Hawaiian.
• Q1 2024HoldHOLD: Alaska’s underlying operation improved sharply, with Q1 revenue of $2.2 billion, unit revenue up 3.8% and a revised 2024 adjusted EPS range of $3.25-$5.25. However, the headline recovery is partly obscured by $162 million of Boeing compensation, while the unusually wide EPS range, elevated labor costs, fuel disadvantage and Hawaiian merger uncertainty prevent a clean buy.
• Q4 2023HoldAlaska delivered solid underlying execution—Q4 adjusted EPS was $0.30, FY adjusted EPS was $4.53, CASMex fell 2.6%, and premium, loyalty and ancillary revenue reached 46% of sales—but the MAX 9 grounding creates a material near-term reset. FY2024 EPS guidance is $3-$5, including an assumed $150 million grounding hit, while aircraft deliveries, labor costs, Boeing accountability and Hawaiian approval remain uncertain; the call supports a hold, not a clean buy.
• 2023-12-03HoldHold: Alaska is buying Hawaiian for approximately $1.9 billion, or 0.7x revenue, creating a combined airline with more than $13 billion of revenue and at least $235 million of identified run-rate synergies. The strategic logic is credible—leadership in an $8 billion Hawaii market, network and loyalty upside, and an attractive purchase price—but regulatory approval, fleet/labor complexity, Hawaiian’s recovery, and execution risk make this a wait-for-de-risking situation rather than a clean buy.