Alaska Air lifts profit outlook well above forecasts, with help from CrowdStrike

By Tomi Kilgore

Revenue metric also raised as demand remained strong through the summer travel period

Shares of Alaska Air Group Inc. climbed toward a three-month high in early Thursday trading, after the air carrier raised its third-quarter profit outlook, citing continued strong summer-travel demand.

The company (ALK) said what also helped lift unit revenue above expectations was the widespread computer outage in July linked to cybersecurity company CrowdStrike Holdings Inc. (CRWD), which disrupted the operations of some of Alaska Air's competitors.

Alaska Air's stock ran up 5.1% in premarket trading, putting it on track to open around the highest closing prices seen since June 24.

The company now expects earnings per share of $2.15 to $2.25, up sharply from previous guidance of $1.40 to $1.60 and well above the current FactSet EPS consensus of $1.61.

"Throughout the summer travel period, we continued to experience strong demand as we flew a record schedule and delivered a reliable operation for guests with a 99.3% completion rate [quarter to date]," the company said.

Lower fuel costs are also helping to boost the profit outlook, as the expected economic fuel cost per gallon was lowered to $2.60 to $2.70 from $2.85 to $2.95.

The company kept its capacity growth outlook intact, with available seat miles expected to rise 2% to 3%. But guidance for revenue per available seat mile was increased to up about 2% from "flat to positive."

"While capacity remains in line with prior expectations, revenue has performed better than anticipated driven by additional revenue in July related to CrowdStrike disruptions across the industry and stronger performance in August and September," the company said.

The stock has tacked on 1.1% year to date through Wednesday, while the U.S. Global Jets ETF (JETS) has slipped 0.5% and the S&P 500 has advanced 16.4%.

-Tomi Kilgore

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09-12-24 0740ET

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