Summary
- Reported record full year revenue of $11.7 billion
- Fourth quarter and full year adjusted earnings per share exceed high end of previously reported guidance
- Repurchased approximately $250 million in outstanding shares in the fourth quarter
- Announced record performance-based pay, totaling six weeks pay for most Alaska and Horizon employees
- Alaska Air Group Inc. (NYSE: ALK) today reported financial results for the fourth quarter and full year ended December 31, 2024.
Air Group completed 2024 on a high note, with record revenues of $11.7 billion and a GAAP pretax margin of 4.6%. On an adjusted basis, the full year pretax margin of 7.1% is expected to be amongst the best in the industry despite the completed acquisition of Hawaiian Airlines and fleet grounding in the first quarter of the year.
“This was a transformational year as we brought Hawaiian Airlines into Alaska Air Group and began our journey to unlock $1 billion in incremental pretax profit over the next three years. We’re proud that our incentive plan will reward Alaska Airlines and Horizon Air employees with nearly six weeks of pay, which we believe will lead the industry. Looking forward, our vision is clear and we’re focused on executing our strategic plan – leveraging the strengths of our combined network, enhancing the end-to-end travel experience for our guests, and delivering value for everyone who depends on us.”
– Ben Minicucci
President & CEO of Alaska Air Group
Quarter in Review
Air Group’s consolidated results reported in the fourth quarter and full year 2024 include Hawaiian Airlines as of September 18, 2024 while prior comparable periods exclude any Hawaiian results. Discussion of fourth quarter results and forward-looking guidance refer to pro forma historical results as provided in prior 8-K filings and represented below.
| Q4 2024 vs Q4 2023 Pro Forma except EPS | Prior Expectation | Actual Results |
|---|---|---|
| Capacity (ASMs) | Up ~1.5% | Up 2.5% |
| RASM | Up mid-to-high single digits | Up 7.0% |
| CASMex | Up low-double digits | Up 8.6% |
| Adjusted earnings per share | $0.40 to $0.50 | $0.97 |
Our GAAP pretax margin for the fourth quarter was 2.2% and GAAP earnings per share was $0.55. On an adjusted basis, our pretax margin was 3.9% and earnings per share was $0.97, which exceeded our latest guidance by approximately $0.50 at the midpoint driven by revenue and cost improvement across our business as well as lower non-operating expenses. Due to these same out-performance factors, full year adjusted EPS of $4.87 also surpassed the better end of our prior guidance range.
Fourth quarter revenue was stronger than expected across both Alaska and Hawaiian, building on the strength seen in the fall, and exiting the year with momentum driven by sustained leisure demand and an uptick in corporate travel which improved close in demand. With mild winter weather to end the year, we delivered reliable operational performance for our guests throughout the holiday travel period, with higher-than-expected completion rate and load factor. After inflecting positive in August, unit revenues improved nearly 6 points sequentially from 1% in the third quarter to 7% in the fourth quarter. This momentum has continued, with ongoing close-in strength in early Q1 bookings. Combined with a stable industry capacity backdrop, we are encouraged by these early indications for Q1 and a constructive start to 2025.
Unit cost performance in the fourth quarter also exceeded our guidance, up 8.6% as compared to pro forma 2023, as disciplined non-fuel cost performance offset higher performance-based pay accruals and better completion rates drove higher capacity. Throughout 2024, unit costs remained pressured from constrained capacity as a result of aircraft delivery delays, but are expected to improve through 2025 as we normalize resource levels and capacity compared to 2024.
Alaska Accelerate
Following a great close to 2024, we continue to build on our strong foundation and execute on Alaska Accelerate – our vision for the future. This strategy is focused on building scale, relevance and loyalty to connect our guests to the world with a remarkable travel experience rooted in safety, care and performance and deliver $1 billion in incremental profit over the next 3 years.
“Our success this year and our optimistic look ahead is built upon a proven strategy that puts the guest at the center of everything we do and unlocks new opportunities across our business. We’re poised to capitalize on the strength of a combined global network, a powerful loyalty program, two beloved brands, and a remarkable travel experience that meets guests’ needs at every phase of the travel journey.”
– Andrew Harrison
Chief Commercial Officer
First Quarter & Full Year 2025 Guidance
For the first quarter and full year 2025, we expect the following results compared to pro forma historical results as if the acquisition had occurred on January 1, 2023.
| | Q1 2025 Expectation | FY 2025 Expectation | |
|---|---|---|---|
| Capacity (ASMs) % change versus pro forma 2024 | Up 2.5% to 3.5% | Up 2% to 3% | |
| RASM % change versus pro forma 2024 | Up high-single digits | ||
| CASMex % change versus pro forma 2024 | Up low-single digits to mid-single digits | ||
| Adjusted earnings (loss) per share | ($0.70) to ($0.50) | >$5.75 |
View Alaska Air Group Q4 2024 Earnings PDF
Financial Results and Updates:
- Reported net income for the fourth quarter and full year 2024 under Generally Accepted Accounting Principles (GAAP) of $71 million, or $0.55 per share, and $395 million, or $3.08 per share. These results compare to net loss for the fourth quarter and net income for the full year 2023 of $2 million, or $0.02 per share, and $235 million, or $1.83 per share.
- Reported net income for the fourth quarter and full year 2024, excluding special items and other adjustments, of $125 million, or $0.97 per share, and $625 million, or $4.87 per share. These results compare to net income for the fourth quarter and full year 2023, excluding special items and other adjustments, of $38 million, or $0.30 per share, and $583 million, or $4.53 per share.
- Generated an adjusted pretax margin of 7.1% for the full year 2024, among the highest in the industry.
- Generated $1.5 billion in operating cash flow for the full year 2024.
- Completed $2 billion in financing, backed by the Company’s Mileage Plan program, and retired $1.6 billion of certain debt acquired with Hawaiian Airlines.
- Repurchased 3.9 million shares of common stock for approximately $250 million in the fourth quarter, bringing total repurchases to 5.5 million shares for $312 million in 2024.
- Authorized a new $1 billion dollar share repurchase plan to be executed over the next four years, with repurchases beginning in January 2025.
- Alaska and Horizon employees earned $325 million of incentive pay in 2024 by achieving profitability, safety, sustainability, and operational targets. The payout represents approximately six weeks of pay for most employees.
Operational Updates
- Reached an Agreement in Concept with Alaska flight attendants for an updated collective bargaining agreement in January 2025.
- Announced the launch of Seattle as an international gateway with nonstop routes to Tokyo Narita and Seoul Incheon in 2025, with plans to add 12 international widebody destinations by 2030.
- Approved to fly nonstop service between San Diego International Airport and Ronald Reagan Washington National Airport, making Alaska the only airline to operate this route.
- Expanding service from the states of Alaska and Oregon beginning this summer, including nonstop service from Anchorage to Detroit and Sacramento; Portland to Houston, Fairbanks, and Eugene; and Medford to San Diego.
- Hawaiian received two A330-300 freighter aircraft from Amazon during the fourth quarter, bringing the total within the airline’s fleet to six
Commercial Updates
- Announced improvements to Alaska’s Mileage Plan for 2025, including more milestone rewards and new ways to earn elite qualifying miles.
- Introduced Alaska’s new premium credit card, which will be available late summer 2025 and will provide holders exclusive travel benefits and perks.
- Launched Huaka’i by Hawaiian, a free program for HawaiianMiles members that offers kama‘āina (Hawai’i residents) exclusive travel benefits when flying with Hawaiian Airlines.
- The following table reconciles the company’s reported GAAP net income (loss) per share (EPS) for the three and twelve months ended December 31, 2024 and 2023 to adjusted amounts.
| | Three Months Ended December 31, | ||||||
|---|---|---|---|---|---|---|---|
| 2024 | 2023 | ||||||
| (in millions, except per share amounts) | Dollars | Per Share | Dollars | Per Share | |||
| Net income (loss) | $71 | $0.55 | ($2) | ($0.02) | |||
| Mark-to-market fuel hedge adjustments | -6 | -0.05 | 12 | 0.09 | |||
| Unrealized gain on foreign debt | -10 | -0.08 | — | — | |||
| Special items – operating | 91 | 0.71 | 37 | 0.29 | |||
| Special items – net non-operating | -17 | -0.13 | 4 | 0.03 | |||
| Income tax effect of adjustments above(a) | -4 | -0.03 | -13 | -0.09 | |||
| Adjusted net income | $125 | $0.97 | $38 | $0.30 | |||
| | Twelve Months Ended December 31, | ||||||
|---|---|---|---|---|---|---|---|
| 2024 | 2023 | ||||||
| (in millions, except per share amounts) | Dollars | Per Share | Dollars | Per Share | |||
| Net income | $395 | $3.08 | $235 | $1.83 | |||
| Mark-to-market fuel hedge adjustments | -28 | -0.22 | -2 | -0.02 | |||
| Unrealized gain on foreign debt | -10 | -0.08 | — | — | |||
| Special items – operating | 345 | 2.69 | 443 | 3.44 | |||
| Special items – net non-operating | -16 | -0.12 | 18 | 0.14 | |||
| Income tax effect of adjustments above(a) | -61 | -0.48 | -111 | -0.86 | |||
| Adjusted net income | $625 | $4.87 | $583 | $4.53 | |||
A conference call regarding the fourth quarter and full year results will be streamed online at 8:30 a.m. PST on January 23, 2025. It can be accessed at www.alaskaair.com/investors. For those unable to listen to the live broadcast, a replay will be available after the conclusion of the call.
