Alaska Air Group Expects Strong Q4 Performance

Alaska Air Group Inc. (ALK) announced on Thursday that it anticipates its fourth-quarter capacity and revenue to be at the high end of its previous guidance. This positive outlook is largely attributed to robust travel demand during the holiday season.

Increased Revenue Guidance

The airline reported that its CASMex guide has improved and is now aligned with the better end of its prior guidance. Alaska Air Group attributes this progress to strong operational performance and cost execution. Furthermore, revenue is also expected to surpass the original midpoint forecast due to strong holiday bookings and improved close-in demand.

Fuel Cost Concerns

However, Alaska Air Group has noted that its fuel cost per gallon is tracking at the high end of its projected range. Currently, the cost stands at approximately $3.40 compared to the previous guidance of $3.30 to $3.40 per gallon.

Revised Projections

Despite this concern, the company has raised its revenue guidance to a growth range of 2.25% to 3.25%. This reflects an increase compared to the previous guidance of up to 1% to 4%. Additionally, Alaska Air Group now expects its capacity, measured as available seat miles, to rise by 13% to 14% instead of the previously projected range of 11% to 14%. The cost per available seat mile, excluding fuel, is forecasted to decrease by about 5%. This is an improvement from the prior guidance of a decrease between 3% and 5%.

Stock Performance

As market open approaches, Alaska Air Group’s stock showed a 0.6% increase in premarket trading. However, the stock has seen a decline of 10% year-to-date. In comparison, the U.S. Global JETS ETF (JETS) has gained 10% and the S&P 500 (SPX) has experienced a significant increase of 22.6%.