Analyst Says Alaska Air’s Guidance Implies ‘Strong Finish’ To Q1

April 12, 2019

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Courtesy of Benzinga.

Analyst Says Alaska Air's Guidance Implies 'Strong Finish' To Q1

Alaska Air Group, Inc. (NYSE: ALK) revised its revenue per available seat mile (RASM) higher in a regulatory filing, which implies the company saw a “strong finish” to the first quarter.

The Analyst

Raymond James’ Savanthi Syth maintains a Strong Buy rating on Alaska Air with an unchanged $80 price target.

The Thesis

Alaska Air revised its first quarter RASM guidance from a range of 11.97 -12.07 cents to a new range of 12.08-12.10 cents. Syth says based on the upward revision the company’s first quarter EPS is tracking at 15 cents per share, which is above the consensus estimate of a 1-cent loss. The company saw good cost execution during the quarter despite notable weather issues in February.

The company’s Hawaii operations remain in negative year-over-year RASM territory but its performance looks to be in-line with management’s expectations, the analyst wrote in a note. In fact, Southwest Airlines Co (NYSE: LUV)’s entry into the region hasn’t shown an incremental drag so far. In addition, intra-California pricing which was an issue in 2018 has now improved back to 2017’s levels.

Alaska Air is finalizing a two-year focus on becoming a single airline after closing the acquisition of Virgin America in late 2016. The company is now in a better position to benefit from a significantly larger platform coupled with diminishing headwinds.