ALK Q3 2022 Earnings

Call Details

• Call Title: Alaska Air Group, Inc. Q3 2022 Earnings Call
• Date: October 20, 2022 3:30 PM UTC
• Management Team:
  • Ben Minicucci (Chief Executive Officer)
  • Andrew (Executive Vice President, Commercial)
  • Shane Tackett (Chief Financial Officer)
  • Emily Halverson (Vice President of Finance)
  • Nat Pieper (Finance)
  • Investor Relations Representative (Investor Relations Representative)

Call Summary

Financial Performance

• Third quarter GAAP net income was $40M and adjusted net income excluding special items was $325M.
• Third quarter revenue was a record $2.8B and was described as up 18% versus 2019 on 7% less capacity.
• Reported pre-tax margin for the quarter was 15.6% and was stated to be within two points of 2019 margin despite higher fuel and new labor costs.
• Year-to-date operating cash flow reached $1.4B and Q3 operating cash flow was $174M.
• Total liquidity at quarter end was $3.6B, representing approximately two times the cash needed to run the business over a short horizon.
• Debt to capital ratio was reported at 49% with approximately $100M of debt payments in the quarter and $50M remaining for the year.

Guidance

• Full year adjusted pre-tax margin guidance was reiterated at 6% to 9%.
• Fourth quarter capacity is expected to be down 7% to 10% versus 2019, implying Q4 unit revenue of approximately up 24% versus 2019.
• Fourth quarter total revenue was guided to be up 12% to 15% versus 2019 on capacity down 7% to 10% versus 2019.
• Fourth quarter CASM-X was guided to be up 20% to 23%, and full year CASM-X was revised to be up 19% to 20% versus 2019.
• Expected fuel price per gallon for Q4 was given as $3.50 to $3.70 and hedging was expected to provide roughly $170M benefit for the year.
• Full year capacity was reiterated to be down 8% to 9% versus 2019 as previously communicated.