Alaska Airlines soared Tuesday after laying out its 2025 guidance, as well as a strategic initiative plan that included expanding Seattle to a global gateway. Meanwhile, other airline stocks trended generally higher early, led by American Airlines, after receiving an upgrade, The Fly reported.
Bernstein on Tuesday upgraded American Airlines to outperform from market perform, citing a positive industry backdrop and a new co-branded credit card deal with Citi that the company announced Thursday. The deal was set to generate "sizable" cash flow in the coming years, which will help the airline deleverage. That puts American "closer to a have than a have-not," Bernstein wrote in the research note, and added that better pricing and lower fuel costs are prompting a better fourth-quarter outlook. The firm raised its price target on AAL stock to 24 from 14.
American Airlines lifted its Q4 guidance last week noting that "the pricing and revenue environment has continued to improve."
American Airlines guided earnings between 55 cents and 75 cents per share adjusted for Q4, well above its prior guidance for 25 cents to 50 cents per share. FactSet expects 41 cents per share.
Alaska Provides Strong Outlook
Elsewhere, Alaska Air Group, the parent company of Alaska Airlines, unveiled a three-year strategic plan to deliver $1 billion in incremental profit following its combination with Hawaiian Airlines, which was completed in September.
Under the Alaska Accelerate program, Alaska expects to drive double-digit margins of 11% to 13% and achieve earnings per share of at least $10 by 2027. The company also doubled its synergy estimates from the merger to at least $500 million by 2027.
The airline also announced it is launching a new global gateway in Seattle with nonstop service to Tokyo and Seoul, South Korea, beginning in 2025. Alaska also plans to enhance its domestic network, which will launch in the spring. Other initiatives include enhancing airport lounges, expanding premium seat capacity, and introducing a new loyalty platform and premium credit card offering.
For 2025, Alaska expects earnings increase 30% to at least $5.75 per share, with a 2% to 3% capacity growth. The company expects $1.4 billion to $1.5 billion in capital expenditures for the year, with around $250 million in share repurchases. Alaska Airlines hosts its investor day presentation at 1 p.m. ET Tuesday.
American Airlines, Alaska Stock Action
Alaska Air stock rallied 13.2% Tuesday to break above a July 2023 high and mark the stock's highest level since April 2022. Shares led the S&P 500 in premarket trade.
ALK stock has soared almost 57% this year through Monday's close.
American Airlines stock surged 2% Tuesday. AAL stock is extended after bolting out of a cup-with-handle buy zone on Thursday.
American Airlines has spiked about 27% in 2024.
Delta Air Lines ticked up slightly Tuesday, to test its 21-day exponential moving average. DAL stock popped about 56% this year.
United Airlines rose less than 1% Tuesday, adding to its 134% gain in 2024.
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