Alaska Air Group (NYSE: ALK) has reported financial results for the third quarter ending September 30, 2023. The third quarter of 2023 marked another high point for the airline, as it led the industry in completion rate.
A Strong Quarter Despite Headwinds
CEO Ben Minicucci expressed his gratitude towards the dedicated team at Alaska Air Group for delivering industry-leading operational performance and maintaining strong cost discipline during the third quarter of 2023.
Their 11.4% adjusted pre-tax margin has positioned them among the best in the industry, all while braving various external challenges.
Alaska Air Group’s continuous investments in its all-Boeing fleet, premium seating on 100% of their aircraft, and access for loyalty members to a global alliance have shaped a premium domestic travel experience that rivals any other in the industry.
Financial Highlights
Let’s break down the financial highlights of Alaska Air Group’s third quarter:
Reported Net Income
Under Generally Accepted Accounting Principles (GAAP), the reported net income for the third quarter of 2023 amounted to $139 million, or $1.08 per share.
This is a substantial improvement compared to the net income of $40 million, or $0.31 per share, during the same quarter in 2022.
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Adjusted Net Income
Excluding special items and mark-to-market fuel hedge accounting adjustments, the adjusted net income for the third quarter of 2023 was $237 million, or $1.83 per share, while the third quarter of 2022 recorded $325 million, or $2.53 per share.
Operating Revenue
Alaska Air Group achieved a very tidy $2.8 billion in operating revenue, showcasing their impressive financial performance.
Cost Control
The company successfully reduced CASM (Cost per Available Seat Mile) excluding fuel and special items by 5% when compared to the third quarter of 2022, demonstrating their dedication to cost-efficiency.
Share Repurchases
Alaska Air Group actively repurchased 248,988 shares of common stock for approximately $13 million, bringing their total repurchases to $70 million for the nine months ending September 30, 2023.
Operating Cash Flow
The third quarter of 2023 saw the generation of $271 million in operating cash flow, underlining the company’s financial stability.
Strong Financial Position
As of September 30, 2023, Alaska Air Group held $2.5 billion in unrestricted cash and marketable securities, further solidifying their financial position.
Debt Management
The company managed its debt well, ending the quarter with a debt-to-capitalization ratio of 48%, well within their target range of 40% to 50%.
Operational Updates
Beyond the financials, Alaska Air Group’s operational updates in the third quarter of 2023 have been equally impressive:
Exceptional Completion Rate
Alaska Air Group achieved an industry-leading completion rate of 99.7%, highlighting their unwavering commitment to customer satisfaction.
Fleet Transition
The company completed its transition to an all-Boeing fleet with the retirement of its A321neo aircraft in September.
They also reached an agreement to sell the ten A321neos to American Airlines, with aircraft sales beginning in the fourth quarter of 2023.
Alaska Air Group also expanded its fleet by adding five 737-9 aircraft and two E175 aircraft during the quarter.
This brought the total number of aircraft in the Alaska and Horizon fleets to 56 and 41, respectively.
Community Support
In a commendable display of corporate responsibility, Alaska Air Group provided support and relief to the Maui community following the devastating August wildfires, contributing nearly 30 million miles to assist with ongoing efforts.
New Routes
The company announced new nonstop daily service between San Diego and Atlanta, further enhancing their extensive network. This new route will be the 37th nonstop destination from San Diego, a testament to their commitment to connectivity.
Technological Advancements
Through Alaska Star Ventures, the company invested in Assaia, a company dedicated to utilizing artificial intelligence to optimize aircraft turn times and improve on-time performance.
This investment demonstrates their commitment to staying at the forefront of aviation technology.
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