Alaska Air Group (ALK) Q2 2024 earnings summary

Executive summary

• Achieved record quarterly revenue of $2.9 billion in Q2 2024, with 33% from premium segments and nearly $1 billion from premium sources, up 2% year-over-year, driven by premium cabin growth and loyalty program strength.

• Adjusted pretax margin reached 15.8%, positioning the company as an industry leader in profitability for the quarter.

• Reported GAAP net income of $220 million ($1.71 per share) and adjusted net income of $327 million ($2.55 per share), both down from Q2 2023.

• Secured a tentative agreement with flight attendants for a ~32% compensation increase, pending ratification.

• Maintained operational excellence with a 99.5% or better completion rate each month in the quarter.

Financial highlights

• Q2 revenue up 2% year-over-year on a 6% capacity increase; unit revenues down 3.7% due to $60 million lost revenue from fleet grounding.

• Adjusted earnings per share was $2.55; fuel price per gallon was $2.84, down from $3.08 in Q1.

• Debt-to-capitalization ratio was 45% at June 30, 2024, within the 40–50% target range; adjusted net debt/EBITDAR improved to 1.0x.

• Share repurchases totaled $28 million in Q2, $49 million year-to-date; $262 million remains under the $1 billion buyback program.

• Operating cash flow was $580 million for Q2 2024; unrestricted cash and marketable securities totaled $2.5 billion at quarter-end.

Outlook and guidance

• Full-year 2024 adjusted EPS guidance lowered to $3.50–$4.50, reflecting higher labor costs and a softer domestic revenue environment.

• Q3 2024 capacity expected to rise 2–3% year-over-year; full-year capacity growth expected to be less than 2.5% due to Boeing delivery delays.

• Q3 EPS guidance of $1.40 to $1.60; full-year margin expected to be flat or better than 2023, excluding fleet grounding impact.

• Maintenance, labor, and higher airport real estate costs to add incremental cost pressure in the second half of 2024.

• 2025 capacity growth expected to remain below medium- to long-term targets due to delivery delays.