ALK Q4 2021 Earnings

Call Details

• Call Title: Alaska Air Group, Inc. Q4 2021 Earnings Call
• Date: January 27, 2022 at 4:30 PM UTC
• Management Team:
  • Emily Halverson (Managing Director of Investor Relations / Vice President of Finance)
  • Ben Minicucci (Chief Executive Officer)
  • Andrew Harrison (Chief Commercial Officer)
  • Shane Tackett (Chief Financial Officer)
  • Nat Pieper (Finance)

Call Summary

Financial Performance

• Fourth quarter GAAP net income was $18 million and adjusted net income excluding special items and mark-to-market fuel hedge adjustments was $31 million.
• Fourth quarter pre-tax margin was 2.4% for the quarter.
• Full year revenues recovered to $6.2 billion, representing 70% of 2019 levels.
• Full-year adjusted pre-tax loss was $342 million, while adjusted pre-tax profit for the second half of 2021 was $282 million and the second half adjusted pre-tax margin exceeded 7%.
• Q4 cash flow from operations was $129 million and year-end total liquidity was $3.5 billion, essentially unchanged from Q3.
• Adjusted net debt at year-end was 40% lower than 2019 and year-end debt-to-capital ratio was 49%, 12 points lower than year-end 2020.

Guidance

• Q1 revenues are expected to be down 14% to 17% from 2019 levels due to Omicron impacts and lost close-in bookings.
• The company expects to fly approximately 10% to 13% below the same period in 2019 in Q1.
• The bulk of Omicron impact is expected in January and February with the company expecting to be profitable for the month of March and the remainder of 2022.
• Full year 2022 capacity is targeted to be up versus 2019 between 2% and 6% depending on demand, with first half flat to slightly up and second half potentially up to 10% versus 2019.
• Q1 CASMx is expected to be up 15% to 18% on capacity down 10% to 13% versus 2019, with seven points driven by late pulldown of capacity.
• Full year 2022 unit costs inclusive of lease return expense are expected to be up 3% to 6% and ex-lease return up 1% to 3%.