Alaska Air Group, Inc. (ALK) DOWNGRADE RATING
Reducing Estimates and Rating Delta encroachment in Alaska’s nonhub markets adds revenue risk not previously factored into our outlook – lowering our ests. & reducing our rating to Neutral (from Outperform). Our downgrade is based on new capacity findings for S. CA, an area that accounts for about 23% of ALK’s flying. Delta is aggressively adding capacity out of its recently designated Los Angeles hub. Already the 4 th largest carrier there (behind LUV, UAL & AMR), Delta’s presence is significant & vs a year ago, has added 23 new markets, growing YoY domestic capacity 11% in 2Q & 15% in 3Q. The new capacity impacts 50% of markets served by ALK out of L.A. (vs 26% served by UAL & LUV, however, given the relatively larger size of LUV & UAUA, believe the impact to these two is deminimus). ALK’s smaller size & LUV’s coming presence (fall 07) at SFO (Bay area an additional 10% of ALK flying), on the other hand, increase revenue uncertainty at a time when labor groups are seeking higher wages, thereby adding incremental risk & justifying a more cautious outlook on ALK shares.
Apr 06, 2007
NEW YORK, Apr 07, 2007 (AP via COMTEX News Network) -- Alaska Air Group Inc., parent of Alaska Airlines and Horizon Air, said Friday it expects to post a loss in its first quarter.
The company made the announcement in a filing with the Securities and Exchange Commission.
Due to a change in a capacity purchase agreement with Horizon, Alaska Airlines also expects a $7 million to $8 million reduction in quarterly results from regional flying arrangements.
Alaska Air Group also warned that the reduction will represent a "significant percentage" of the unit's anticipated full-year loss from regional flying.
Wall Street expects the company to post a first-quarter loss of 20 cents per share on revenue of $772 million.
No doubt this will also add ammunition for their side of the negotiations table...............and certainly justifies the 1.9 million in total compensation received by our CEO
Reducing Estimates and Rating Delta encroachment in Alaska’s nonhub markets adds revenue risk not previously factored into our outlook – lowering our ests. & reducing our rating to Neutral (from Outperform). Our downgrade is based on new capacity findings for S. CA, an area that accounts for about 23% of ALK’s flying. Delta is aggressively adding capacity out of its recently designated Los Angeles hub. Already the 4 th largest carrier there (behind LUV, UAL & AMR), Delta’s presence is significant & vs a year ago, has added 23 new markets, growing YoY domestic capacity 11% in 2Q & 15% in 3Q. The new capacity impacts 50% of markets served by ALK out of L.A. (vs 26% served by UAL & LUV, however, given the relatively larger size of LUV & UAUA, believe the impact to these two is deminimus). ALK’s smaller size & LUV’s coming presence (fall 07) at SFO (Bay area an additional 10% of ALK flying), on the other hand, increase revenue uncertainty at a time when labor groups are seeking higher wages, thereby adding incremental risk & justifying a more cautious outlook on ALK shares.
Apr 06, 2007
NEW YORK, Apr 07, 2007 (AP via COMTEX News Network) -- Alaska Air Group Inc., parent of Alaska Airlines and Horizon Air, said Friday it expects to post a loss in its first quarter.
The company made the announcement in a filing with the Securities and Exchange Commission.
Due to a change in a capacity purchase agreement with Horizon, Alaska Airlines also expects a $7 million to $8 million reduction in quarterly results from regional flying arrangements.
Alaska Air Group also warned that the reduction will represent a "significant percentage" of the unit's anticipated full-year loss from regional flying.
Wall Street expects the company to post a first-quarter loss of 20 cents per share on revenue of $772 million.
No doubt this will also add ammunition for their side of the negotiations table...............and certainly justifies the 1.9 million in total compensation received by our CEO
TC
