Barclays Reiterates Overweight Rating on Alaska Air (ALK)

Barclays analyst Brandon Oglenski reiterated an Overweight rating and $55.00 price target on Alaska Air (NYSE: ALK)

The analyst comments "Where we stand: Alaska delivered better than expected third quarter results following the acquisition of Hawaiian Airlines last month. Importantly, management provided guidance for improved consolidated unit revenue performance in the fourth quarter, supporting a better margin outlook in the legacy Alaska business and close to break-even expectations for Hawaiian, a material improvement from steep operating losses just a year ago. Lower industry competitive capacity growth was cited by management as supporting the improved revenue performance in the fourth quarter. Further, the significant improvement in Hawaiian margins comes as following several specific headwinds abate in the business such as the GTF related A321 grounding, fleet additions of B787 and A330F aircraft as well as the wildfire-driven Maui travel weakness. Part of the better outcome was owed to the lack of a ratified flight attendant labor contract within the legacy Alaska network, which management had previously expected to be finalized in the third quarter. The lack of a labor deal meant the company would no longer accrue for the higher wages rates that were anticipated previously, benefiting non-fuel Alaska unit costs in the third quarter by around 2%. We expect a revised agreement will be reached at some point in the near-future, which should add to costs at that time. Nonetheless, the future looks bright for the combined Alaska-Hawaiian business and management suggested increased deal synergy targets could be provided at the company’s upcoming analyst meeting in December. With this note we update our pro-forma Alaska-Hawaiian model for third quarter results and remain constructive on 2025 estimates, we leave our price target at $55."

For an analyst ratings summary and ratings history on Alaska Air click here. For more ratings news on Alaska Air click here.

Shares of Alaska Air closed at $47.91 yesterday.

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