Alaska Air Group Q4 Earnings Beat, Revs Nearly in Line

Alaska Air Group, Inc. (ALK) reported fourth-quarter 2014 financial numbers with earnings per share of 94 cents surpassing the Zacks Consensus Estimate of 91 cents.

Quarterly revenues increased 8% year over year to $1,306 million and were almost in line with the Zacks Consensus Estimate. On a year-over-year basis, Passenger revenues improved 8%.

Alaska Air Group recently hiked its quarterly dividend by 60% to 20 cents a share on its common stock. The raised dividend will be paid on Mar 10, 2015, to shareholders of record as of Feb 24, 2015.

Operating Statistics

Airline traffic, measured in revenue passenger miles, moved up 9.5% year over year to 7,640 million in the fourth quarter. Capacity or available seat miles increased 10.6% to 9,156 million, while load factor (percentage of seats filled with passengers) stood at 83.4% against 84.4% recorded in the year-ago quarter. Meanwhile, passenger revenue per available seat mile (PRASM) decreased 2.4% year over year to 12.19 cents.

Operating Expenses & Operating Income

In the fourth quarter, adjusted operating income jumped 86% to $242 million from the last-year quarter. Total adjusted operating expenses fell 1% year over year to $1,064 million owing to a drop in variable incentive pay and contract service expenses. Fuel price (economic) stood at $2.64 per gallon, down from $3.21 in the year-ago quarter. Consolidated unit cost or cost per available seat mile (CASM), excluding fuel and special items, fell 2.4% year over year to 8.6 cents.

Liquidity

At the end of the fourth quarter, Alaska Air Group had $1,217 million in cash and marketable securities against $1,330 million in the prior year quarter. The company had long-term debt of $686 million, representing a debt-to-capitalization ratio of 31%.

In full-year 2014, the company generated operating cash flow of $1 billion and free cash flow of $344 million.

Alaska Air Group currently holds a Zacks Rank #1 (Strong Buy).

Other Key Picks

Other favorably-ranked stocks in the same industry include Delta Air Lines Inc. (DAL), American Airlines Group (AAL) and Hawaiian Holdings Inc. (HA). All three sport a Zacks Rank #1.