Alaska Air (ALK)

What Moves the Stock

1. 01Jet fuel prices and hedging effectiveness - fuel represents 30-35% of operating costs, with crude oil correlation driving quarterly earnings volatility
2. 02Passenger unit revenue (PRASM) trends - pricing power on West Coast and transcontinental routes, competitive capacity discipline
3. 03Hawaiian Airlines integration execution - synergy realization ($235M annual target), fleet rationalization, network optimization
4. 04Load factor and yield management - ability to maintain 82-86% load factors while sustaining fare premiums
5. 05Operational performance metrics - completion factor, on-time arrival rates affecting customer retention and cost efficiency
6. 06Passenger ticket revenue (~85% of total) - mainline and regional operations across domestic and international routes
7. 07Mileage Plan loyalty program revenue (~8-10%) - credit card partnerships and miles sales to partners
8. 08Cargo and other ancillary revenue (~5-7%) - baggage fees, seat selection, onboard sales, freight services

ALK Chart

My Notes

• value/turnaround - Current 0.5x P/S and 9.9x EV/EBITDA multiples reflect depressed margins and integration uncertainty.
• Rising rates create multiple headwinds: (1) Higher aircraft financing costs - Alaska has $5.4B debt with mix of fixed/floating exposure…
• Watch on earnings: WTI crude oil spot price - primary driver of jet fuel costs (30-35% of operating expenses), West Coast business travel indices - corporate travel demand in Seattle, San Francisco, Los Angeles tech/finance hubs, Domestic airline capacity growth (ASM) - industry supply discipline affecting pricing power.