Key Takeaways
- Alaska Air Group posted a smaller-than-expected first-quarter loss and higher revenue as travel demand helped offset the January midair incident on a Boeing 737 Max 9 jet that led to the grounding of many of its planes.
- The carrier received $162 million in compensation from Boeing in the first quarter because of the door plug blowout.
- Alaska Air gave current-quarter guidance that exceeded analysts’ estimates.
Shares of Alaska Air Group ( ALK ) took off in intraday trading Thursday after the airline posted better-than-expected results and guidance as travel demand boomed, helping to offset the effects of a January flight emergency.
The carrier reported a first-quarter adjusted loss of $116 million, or $0.92 per share, with revenue rising 1.6% to $2.23 billion. Both beat estimates.
Alaska Air’s results were impacted by a midair incident on Jan. 5 in which a door plug on a Boeing ( BA ) 737 Max 9 jet blew out, leading to a temporary grounding of some of the airline’s planes. Earlier this month, Alaska Air announced that Boeing had paid $160 million in compensation during the first quarter for lost revenue from the Flight 1282 incident, and in this report noted the total was actually $162 million. The carrier has indicated it expects further payments from Boeing in the future.
Alaska Air explained that its unit revenue rose 3.8%, exceeding its forecasts, “driven by better-than-expected performance from our Q1 network reconfiguration, strong return of West Coast corporate travel, and robust close-in leisure demand.” It pointed out that unit revenue would have been up 5% had it not been for the losses caused by the Flight 1282 event.
Chief Executive Officer (CEO ) Ben Minicucci said that “despite significant challenges to start the year our results have far exceeded initial expectations.”
The airline noted it sees current quarter earnings per share (EPS ) in the range of $2.20 to $2.40, above analysts’ forecasts.
Alaska Air Group shares climbed 7% as of 11:15 a.m. ET Thursday to $45.70, their highest level since August.