Alaska Air Group Reports Strong Q4/FY 2023 Financial Results

DALLAS — The Alaska Air Group (AS) has announced its financial results for the fourth quarter and full year ending on December 31, 2023.

The company reported a net loss of US$2 million, or US$0.02 per share, for the fourth quarter of 2023, compared to a net income of US$22 million, or US$0.17 per diluted share, for the same period in 2022.

However, for the full year 2023, the airline group reported a net income of US$235 million, or US$1.83 per diluted share, compared to a net income of US$58 million, or US$0.45 per diluted share, in 2022.

Finally, the group ended the year with a debt-to-capitalization ratio of 46%, within the target range of 40% to 50%. The company also repaid US$40 million in debt in the fourth quarter, bringing total debt payments to US$282 million for the full year 2023.

Despite a net loss in the fourth quarter, we see that the group achieved net income for the full year and demonstrated a strong adjusted pretax margin. AS also made significant operational updates and plans, including the agreement to purchase Hawaiian Airlines (HA), an acquisition still pending approval from Hawaiian shareholders and U.S. regulators, and the introduction of new routes.

Amid the Boeing 737-9 grounding, the group says it remains committed to safety, providing a premium experience for its guests, and delivering durable financial performance moving forward.

Alaska Airlines grounded Boeing 737-9 at SEA. Photo: Brandon Farris/Airways

Key Financial Highlights

Alaska Air Group achieved a strong adjusted pretax margin of 7.5% for the full year 2023, which is among the highest in the industry.
The company recorded US$2.6 billion in operating revenue for the fourth quarter and a record US$10.4 billion for the full year 2023.
Alaska Air Group reduced its CASM (cost per available seat mile) excluding fuel and special items by 6.6% in the fourth quarter and 2.6% for the full year compared to 2022.
The company generated US$1.1 billion in operating cash flow for the full year 2023.
Alaska Air Group repurchased approximately 2 million shares of common stock for US$75 million in the fourth quarter, bringing the total repurchases to approximately 3.5 million shares for US$145 million for the full year 2023.
The company recognized more than US$400 million in bank card partner commissions in the fourth quarter and US$1.6 billion for the full year 2023, representing a 13% year-over-year increase compared to 2022.
Air Group employees earned US$200 million of incentive pay in 2023 by achieving profitability, sustainability, operational, and safety targets.

N960AK, Alaska Airlines Boeing 737-9 MAX @KSEA. Photo: Michael Rodeback/Airways

Operational Updates and Future Plans

Alaska Air Group has agreed to purchase Hawaiian Airlines for US$18 per share in cash. The proposed combined airline will preserve both the Alaska and Hawaiian brands and provide guests with an expanded network across the Pacific.
The company has placed its first 737-800 freighter into operating service, with a second 737-800 freighter expected to be delivered in the first quarter of 2024.
Alaska Air Group announced its 30th global airline partner, Porter Airlines (PD), opening new opportunities for guests to travel to Canada from the West Coast.
The company announced new routes beginning in 2024, including Seattle-Toronto, Anchorage-New York JFK, Anchorage-San Diego, and Portland-Nashville.
Alaska Air Group enhanced its partnership with Condor Airlines (DE) with a bilateral codeshare agreement that enables Alaska and Condor to sell each other's flights.
The company completed the sale of ten Airbus A321neos to American Airlines (AA), with eight transactions occurring in the fourth quarter and two in January.
Alaska Air Group introduced inflight contactless payment Tap to Pay, an industry first, providing customers with an easier option to make purchases while flying.
The company is preparing to complete the final inspections on all of its 737-9 MAX aircraft and has initiated a thorough review of Boeing's production quality and control systems to enhance quality control on new aircraft.

Featured image: Alaska Airlines Boeing 737-9.Photo: Brandon Farris/Airways Jan 24, 2024