ALK - Embedded Expectations Analysis - 2019 08 27
Alaska Air Group, Inc. (ALK:USA) currently trades below recent averages relative toUAFRS-based (Uniform) Earnings, with a 19.0x Uniform P/E, implying bearish expectations for the firm. Additionally, management has concerns about their cash flow and performance, and about their ability to improve productivity.
Specifically, management may be concerned about the sustainability of recent performance levels, and they may lack confidence in their ability to maintain current CASMex fuel levels. Moreover, they appear concerned about the sustainability of recent cash flow levels, and they may lack confidence in their ability to improve productivity and manage their overhead. Furthermore, they may be concerned about ongoing weakness in close-in ticket prices, and they may be overstating their pricing expectations for California transcontinental. Additionally, management may be concerned about the timing of their satellite WiFi installation project, and they may be concerned about the impact of their switch to the basic economy seating class.
Alaska Air Group operates two airlines, Alaska Airlines, Inc. (Alaska) and Horizon Air Industries, Inc. (Horizon). The company's operation also includes McGee Air Services, an aviation services provider. The company has three segments: Mainline, which includes scheduled air transportation on Alaska's Boeing or Airbus jet aircraft for passengers and cargo throughout the United States., and in parts of Canada, Mexico, and Costa Rica; Regional, which includes Horizon's and other third-party carriers' scheduled air transportation for passengers across a shorter distance network within the United States under capacity purchase agreements (CPA); and Horizon, which includes the capacity sold to Alaska under CPA.
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