In order to achieve its $1 billion profit growth target by 2027, Alaska Air Group intends to capitalize on the surge in demand for upscale travel.
Less than a year after signing the agreement, Alaska concluded its $1.9 billion acquisition of Hawaiian Airlines in September, granting it access to wide-body aircraft including the Boeing 787 Dreamliner and Airbus A330 as well as Pacific routes. The two brands function independently.
On Hawaiian’s Airbus A330-200s, the airline will begin nonstop service between its home hub of Seattle-Tacoma International Airport and Tokyo’s Narita International Airport in May. In October, it will begin service between Seattle and Seoul, South Korea’s Incheon International Airport, Alaska announced Tuesday. Fares for the latter route will go on sale in early 2025, while tickets for the new Tokyo flights will go on sale on Tuesday.
Alaska intends to transform the airline by 2030 by deploying wide-body aircraft to fly to at least a dozen foreign locations from Seattle.
On Tuesday, the carrier announced that it had approved a $1 billion share repurchase.
Additionally, Alaska projects pretax margins of 11% to 13% and earnings per share exceeding $10 in 2027. The business projected earnings for 2024, including Hawaiian’s results, to be between $3.50 and $4.50 per share in October. From a prior forecast of 20 to 40 cents per share, it increased its fourth-quarter earnings forecasts to 40 to 50 cents.
As of Monday’s close, Alaska’s stock had increased by about 40% this year, outpacing the S&P 500’s 27% gain. The airline’s stock reached a more than three-year high in morning trading on Tuesday, up around 16% on the release of its long-term goals.
Additionally, the airline is introducing a new premium credit card in partnership with Bank of America, the newest co-brand agreement intended to generate income from consumers even when they are not traveling.
Alaska is assessing its fleet-wide premium seat selection. Shane Tackett, the airline’s chief financial officer, told CNBC that the airline is aiming to improve options on Hawaiian’s Airbus A330s in particular because more passengers are prepared to spend more for greater comfort and space when traveling.
According to Tackett, the majority of the revenue growth over the last two or three years has been in those demand-driven areas, and I believe this trend will likely continue. Although our base main cabin product is excellent, we must meet the growing demand from passengers who wish to upgrade to first class or premium economy.
According to Tackett, more first class and premium economy seats are being purchased outright by consumers than are being filled with complimentary upgrades.
The shift in demand for its first-class seats has also been seen by Seattle’s rival Delta Air Lines, whose 24% domestic-passenger market share is second only to Alaska’s 55% in Seattle. However, a larger percentage of the airport’s foreign passengers fly with Delta.
According to Alaska, a new lounge will be available at San Diego International Airport. Following the inauguration of facilities in New York and Los Angeles this year, Delta announced on Wednesday that it is opening its third Delta OneLounge in Boston, which is only for passengers flying in its highest-tier class.
Tackett, however, told CNBC that he anticipates further Boeing delivery shifts for Alaska.
In January, one of Alaska’s almost brand-new Boeing 737 Max 9s left the manufacturer’s plant without the necessary bolts in place, and a door plug blew off. Boeing’s production and deliveries to airline clients in Alaska, the United States, and the Southwest have slowed as a result of the near disaster and increased quality checks.
They seem to be improving, in my opinion. It won’t take place in a week. Regarding Boeing, whose new CEO Kelly Ortberg is tasked with stabilizing the aircraft manufacturer, Tackett stated that it will take time. We are in a position where we must be really focused on assisting them in realizing that quality is the most crucial factor; to us, it is far more significant than rating.
A nearly two-month machinist strike that stopped manufacturing of the majority of Boeing’s aircraft is expected to have an impact on the company’s November aircraft orders and deliveries, which are set to be released at 11 a.m. Tuesday.
Boeing announced on Tuesday that it has restarted 737 manufacturing at its facility in Renton, Washington, and that it will begin production at its Everett, Washington, site in the coming days.
More from CNBC:
-
Google claims quantum computing milestone but the tech can t solve real-world problems yet
-
ETFs holding bitcoin are now the crypto s largest holders, surpassing creator Satoshi Nakamoto
-
U.S. finalizes more than $6.1 billion chips subsidy for Micron Technology
Note: Every piece of content is rigorously reviewed by our team of experienced writers and editors to ensure its accuracy. Our writers use credible sources and adhere to strict fact-checking protocols to verify all claims and data before publication. If an error is identified, we promptly correct it and strive for transparency in all updates, feel free to reach out to us via email. We appreciate your trust and support!