Alaska Air Group Posts Q4 $0.43 EPS, Inks 110-Jet Fleet Order
Alaska Air Group posted Q4 adjusted EPS of $0.43 on $3.6B revenue, with RASM up 0.6% and CASMex rising 1.3%, and achieved a single operating certificate with Hawaiian Airlines. It repurchased 0.7M shares for $30M and ordered 105 737-10s and five 787s, bolstering its $10 EPS target for 2027.
1. Strong Q4 and Full-Year Financial Performance
Alaska Air Group reported fourth-quarter GAAP pretax margin of 0.8% and net income of $21 million (EPS $0.18), surpassing prior guidance with an adjusted pretax margin of 1.8% and adjusted EPS of $0.43. Full-year GAAP net income was $100 million (EPS $0.83), compared with $395 million (EPS $3.08) in 2024, while adjusted net income reached $293 million (EPS $2.44). Fourth-quarter revenue totaled $3.6 billion, delivering a 0.6% year-over-year unit revenue increase despite a brief government shutdown, with premium revenue up 7%, cargo revenue up 22% and loyalty revenue up 12%. Unit costs excluding fuel and special items rose just 1.3%, better than the 3% expected, reflecting disciplined cost control.
2. Integration Milestones and Fleet Expansion
During the quarter Alaska and Hawaiian Airlines achieved a single operating certificate, unifying regulatory oversight and enabling network synergies. The company unveiled its largest-ever fleet order: 105 Boeing 737-10s, five 787s and options for 35 additional 737-10s, expanding to 475 total aircraft by 2030. In Q4 alone, six 737-8s and one 787-9 were delivered. International growth initiatives included ticket sales for new Seattle–London and Seattle–Rome routes, plus multilingual websites and foreign-currency pricing to drive overseas bookings. Share repurchases totaled 0.7 million shares ($30 million) in Q4 and 11.3 million shares ($570 million) in 2025, underscoring management confidence.
3. Positive Demand Trends and 2026 Guidance
First-quarter bookings have accelerated, with managed corporate revenues rising 20% year-over-year in January and record booking days since January 1. The company expects Q1 unit revenues to remain solidly positive and EPS to be flat year-over-year, marking sequential improvement. For full-year 2026, Alaska Air Group forecasts capacity growth of 2%–3% and adjusted EPS of $3.50 to $6.50, supported by Alaska Accelerate initiatives and Hawaiian integration synergies. Capital expenditures are projected at $1.4 billion to $1.5 billion, and the adjusted full-year tax rate is estimated at 26%–27%. Management emphasizes disciplined cost management to navigate varying macroeconomic scenarios.