Alaska Air Group (NYSE:ALK) shares are on the rise today after the air carrier delivered a better-than-expected performance for the fourth quarter.
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Revenue increased by 3% year-over-year to $2.55 billion. The figure exceeded expectations by $20 million. Similarly, EPS of $0.30 comfortably outpaced estimates by $0.12. During the quarter, passenger revenue increased by 3%, and Mileage Plan Other revenue ticked up by 7%. For the full year, ALK generated revenue of $10.4 billion and $1.1 billion in operating cash flow.
Further, the airline flew 7% more passengers in 2023. The company ended the year with a debt-to-capitalization ratio of 46%. In the aftermath of the operational incidents involving Boeing’s (NYSE:BA) planes, ALK is preparing to complete final inspections on all of its 737-9 MAX planes. It has already completed inspections of all 737-900ER aircraft and initiated a review of Boeing’s production quality and control systems. Additionally, the company has expanded its quality oversight program at Boeing’s production facility.
For Fiscal year 2024, ALK expects adjusted EPS to be in the range of $3 to $5. This outlook points to a $150 million hit owing to the grounding of ALK’s 737-9 MAX fleet. While ALK expects the fleet to gradually return to service through early February, the company now expects capacity growth for the full year to be at or below the lower end of the 3% to 5% range.
Is ALK a Good Stock to Buy Now?
Overall, the Street has a Moderate Buy consensus rating on Alaska Air. Following a nearly 28% decline in the company’s share price over the past year, the average ALK price target of $45.60 points to a 27.3% potential upside in the stock.
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