Alaska Airlines planes.
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Alaska Air Group It expects to grow its profits by $1 billion through 2027 and plans to ride the wave of high-end travel demand to get there.
Alaska closed its $1.9 billion acquisition of Hawaiian Airlines in September, less than a year after signing the deal that gives it access to routes across the Pacific and wide-body aircraft like the boeing 787 Dreamliner and Airbus A330. The two brands operate separately.
The airline will launch nonstop service between its Seattle-Tacoma International Airport hub and Tokyo Narita International Airport in May on Hawaii's Airbus A330-200s, and between Seattle and Seoul, Korea's Incheon International Airport. South, in October, Alaska said Tuesday. Tickets for the new flights to Tokyo will go on sale on Tuesday, while fares for the latest route will go on sale in early 2025.
By 2030, Alaska plans to serve at least a dozen international destinations from Seattle using wide-body aircraft, reshaping the airline.
The airline said Tuesday it authorized a $1 billion share buyback.
Alaska also forecast pretax margins of between 11% and 13% in 2027 and earnings per share above $10. In October, the company estimated 2024 earnings of between $3.50 and $4.50 per share, including results from Hawaiian. It raised its fourth-quarter earnings estimates to 40 to 50 cents per share, up from a previous outlook of 20 to 40 cents.
Alaska stocks have gained nearly 40% so far this year, more than the S&P 500's 27% gain through Monday's close. Shares of the airline rose about 16% in morning trading Tuesday after it unveiled its long-term plans, hitting a more than three-year high.
Alaska Air and S&P 500 Performance
The operator also launches a new “premium” credit card with its partner bank of americathe latest co-branding agreement designed to generate revenue from customers even when they are not flying.
Alaska is evaluating its fleet-wide premium seating offering. Chief Financial Officer Shane Tackett told CNBC that the airline is looking to improve options specifically on Hawaii's Airbus A330s, with more customers willing to pay for more space and comfort during travel.
“When you look at the last two or three years, most of the revenue growth has been in those demand areas and I think that will probably continue,” Tackett said. “We have a really good core main cabin product… but more and more people want the opportunity to get into premium economy or first class and we need to meet that demand.”
Customers are buying more seats than ever in first class and premium economy, rather than filling them with free upgrades, Tackett said.
Seattle's rival Delta Airlineswhose domestic passenger market share of 24% is second to Alaska's 55% in Seattle, has also noticed that shift in demand for its first-class seats. However, Delta has a higher proportion of international passengers from the airport.
Alaska said it plans to offer a new lounge at San Diego International Airport. On Wednesday, Delta said it will open its Delta One Lounge in Boston, its third after opening locations in New York and Los Angeles this year, dedicated to customers traveling in its highest-level cabin.
Meanwhile, Tackett told CNBC he expects more changes to Boeing deliveries to Alaska.
A door plug exploded on one of Alaska's nearly new Boeing 737 Max 9s in January after it left the manufacturer's factory without the key bolts in place. The near-catastrophe and heightened quality checks have slowed Boeing's production and deliveries to airline customers like Alaska, United and Southwest.
“I think they're making progress. It's not going to happen in a week. It's going to take time,” Tackett said of Boeing, whose new chief executive, Kelly Ortberg, is tasked with stabilizing the plane maker. “We're in a position where we have to focus a lot on helping them understand that quality is the most important thing; it's much more important to us than the rate.”
Boeing is scheduled to release November plane orders and deliveries at 11 a.m. Tuesday, a tally that is expected to be affected by a nearly two-month machinists' strike that halted production of most Boeing planes. .
Boeing said Tuesday that it has resumed production of the 737 at its Renton, Washington, facility and said production at its Everett, Washington, factory will begin in the coming days.
