Alaska Airlines issued a caution on Wednesday regarding a potential decline in earnings for the upcoming second quarter, aligning with a trend observed among various carriers experiencing demand that is not meeting expectations.
The airline reported stabilization in bookings but anticipates a six-percentage-point reduction in revenue due to “softer demand.”
Following its merger with Hawaiian Airlines last year, Alaska Airlines expects its second-quarter unit revenue to remain flat or dip as much as 6% compared to the same quarter last year, predicting adjusted earnings per share between $1.15 and $1.65. This forecast falls short of Wall Street analysts’ expectations, which had projected earnings of $2.47 per share.
While Alaska refrained from revising its full-year guidance, it attributed this decision to “economic uncertainty and volatility.” Nevertheless, the airline maintains an optimistic outlook, expecting profitability even amidst anticipated revenue challenges in the latter half of the year.
In the first quarter, Alaska’s unit revenue increased by 5% year-over-year, performing better than that of its larger competitors in the domestic market. Chief Financial Officer Shane Tackett noted that while customers continue to book trips, they are doing so at lower fares than previously expected.
“Fares are not as robust as they were during the fourth quarter of last year and into January and early February,” he stated in a press interview on Wednesday. “While industry demand remains relatively high, it has not reached the levels we had hoped would persist into this year.”
CEO Ben Minicucci remarked, “Alaska is equipped to navigate challenging times, emphasizing safety, care, and performance.” He expressed confidence in the company’s ability to manage prevailing economic uncertainties, highlighting the team’s efforts in maintaining a solid foundation for long-term success.
In terms of financial performance for the first quarter, Alaska Airlines reported results that diverged from Wall Street expectations based on consensus estimates from LSEG:
- Loss per share: 77 cents adjusted vs. an anticipated loss of 75 cents
- Revenue: $3.14 billion vs. an expected $3.17 billion
The airline recorded a net loss of $166 million for the first quarter, a significant increase from a loss of $132 million the previous year. Revenue exceeded $3.1 billion, marking a 41% rise from the same period last year but still falling short of analyst predictions.
After accounting for one-time items, Alaska’s adjusted loss stood at 77 cents per share for the quarter ending March 31, which did not meet the expectations set by analysts.
Alaska Airlines plans to engage with analysts to discuss its quarterly results and future outlook during a conference call scheduled for 11:30 a.m. ET on Thursday.
