Alaska Air Group (ALK) Q2 Earnings Top Estimates, Fall Y/Y
Alaska Air Group, Inc. ALK reported second-quarter 2018 earnings per share (excluding 10 cents from non-recurring items) of $1.66 per share, surpassing the Zacks Consensus Estimate of $1.63. Earnings declined on a year-over-year basis mainly due to high fuel costs.
Revenues came in at $2,156 million, which fell short of the Zacks Consensus Estimate of $2,174.2 million. However, revenues increased on a year over year basis. Passenger revenues, accounting for a bulk of the top line (92.6%), were also up 3% on a year-over-year basis.
Operating Statistics
Airline traffic, measured in revenue passenger miles, rose 6.9% year over year in the reported quarter. Capacity or available seat miles expanded 7.8%. Load factor (percentage of seats occupied by passengers) contracted 80 basis points to 86% as capacity expansion outweighed traffic growth.
Total revenue per available seat mile (RASM: a key measure of unit revenues) decreased 4.8% year over year to 12.81 cents in the reported quarter. Yield slipped 4% to 13.79 cents.
Alaska Air Group, Inc. Price, Consensus and EPS Surprise
Alaska Air Group, Inc. Price, Consensus and EPS Surprise | Alaska Air Group, Inc. Quote
Operating Expenses & Income
In the quarter under review, total operating expenses were up 17% year over year to $1,885 million. Operating income plunged 44% to $271 million from the prior-year quarter. Fuel price (economic) was $2.30 per gallon, up 34.5%.
Consolidated cost per available seat mile — excluding fuel and special items — nudged up 2% to 8.14 cents, mainly owing to a 16% rise in wages and related benefits.
Liquidity & Buybacks
At the end of the reported quarter, this Zacks Rank #5 (Strong Sell) company had $1,568 million in cash and marketable securities compared with $1,621 million at the end of 2017.
Alaska Air Group exited the quarter with long-term debt of $1,998 million compared with $2,262 million at the end of 2017. Adjusted debt-to-capitalization ratio was 52%. The ratio was 53% at the end of 2017. Moreover, the carrier repurchased 389,739 shares for approximately $25 million in the first half of 2018.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Q3 & 2018 Forecast
For the third quarter of 2018, the carrier expects cost per available seat mile (CASM), excluding fuel and special items, to grow roughly 4.9% year over year. The metric is anticipated to lie between 8.36 cents and 8.41 cents in the third quarter of 2018. For 2018, the same is projected to lie between 8.50 cents and 8.53 cents, up 3.2%. Economic fuel cost per gallon is anticipated to be $2.30 per gallon in the third quarter, up approximately 27.8%. RASM is projected to decline up to 3% in the same period.
Meanwhile, capacity is anticipated to expand around 5.9% in the third quarter. For the full year, the metric is likely to climb 6.1% whereas effective tax rate in 2018 is estimated to be approximately 25%.
Upcoming Releases
Investors interested in the broader Transportation Sector are awaiting second-quarter 2018 earnings reports from key players, namely Genesee & Wyoming Inc. GWR , C.H. Robinson Worldwide, Inc. CHRW and Expeditors International of Washington, Inc. EXPD . Genesee & Wyoming will release results on Jul 27. C.H. Robinson and Expeditors will announce the same on Jul 31 and Aug 7 respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
Genesee & Wyoming, Inc. (GWR) : Free Stock Analysis Report
C.H. Robinson Worldwide, Inc. (CHRW) : Free Stock Analysis Report
Expeditors International of Washington, Inc. (EXPD) : Free Stock Analysis Report
To read this article on Zacks.com click here.
