Alaska Air Group (ALK) Q3 2024 earnings summary

Executive summary

• Completed acquisition of Hawaiian Holdings on September 18, 2024, expanding network and international reach; Q3 results include 13 days of Hawaiian's financials.

• Q3 2024 pretax income rose to $328M from $193M year-over-year, with $95M revenue and $52M net loss from Hawaiian included post-acquisition.

• Achieved industry-leading adjusted pretax margin of 13.0% and GAAP pretax margin of 10.7% for Q3.

• Q3 adjusted EPS of $2.25 exceeded original and revised guidance; GAAP EPS was $1.84.

• Strong liquidity position with $2.5B in cash and marketable securities and $850M undrawn credit facility.

Financial highlights

• Q3 2024 GAAP net income: $236M ($1.84 per share), up from $139M ($1.08) in Q3 2023; adjusted net income: $289M ($2.25 per share), up from $237M ($1.83).

• Total operating revenue rose 8% year-over-year to $3.07B in Q3; passenger and loyalty revenue up 8%, cargo/other up 29%.

• Operating expenses rose 4% to $2.73B; fuel expense down 10% to $624M, non-fuel expenses up 14%.

• Economic fuel cost per gallon averaged $2.61 in Q3 2024, down ~15% from July levels.

• Q3 2024 unit costs up 3.8% year-over-year on a pro forma basis; legacy Air Group up ~7%, Hawaiian down ~2%.

Outlook and guidance

• Q4 2024 capacity expected to be up 1.5% to 2.5% year-over-year; legacy Air Group flat, Hawaiian up 7-8%.

• Pro forma Q4 2024 unit revenue expected to be up mid-single digits year-over-year, among the best in the industry.

• Pro forma Q4 2024 unit costs expected to be up high single digits year-over-year, pressured by lower growth and higher staffing.

• Q4 adjusted EPS guidance: $0.20–$0.40; full-year 2024 EPS expected above midpoint of $3.50–$4.50.

• 2024 capital expenditures planned at $1.2–$1.3B, assuming delivery of 18 Boeing 737 Max aircraft.