Research

ALK – Market expectations are for Uniform ROA to remain muted, and management may be concerned about RASM, passenger growth, and demand

  • Alaska Air Group, Inc. (ALK:USA) currently trades near recent averages relative to UAFRS-based (Uniform) Earnings, with a 19.9x Uniform P/E, implying bearish expectations for the firm. Additionally, management may be concerned about the sustainability of RASM improvements, passenger growth, and Paine Field demand
  • Specifically, management may be concerned about the sustainability of RASM improvements driven by Saver Fares, and they may be exaggerating the value their miles plan offers to customers. Furthermore, they may lack confidence in their ability to sustain passenger growth in the Pacific Northwest, and they may be concerned about the sustainability of demand for flights out of Paine Field.