Air Group completed 2024 on a high note, with record revenues of $11.7 billion and a GAAP pretax margin of 4.6%. On an adjusted basis, the full year pretax margin of 7.1% is expected to be amongst the best in the industry despite the completed acquisition of Hawaiian Airlines and fleet grounding in the first quarter of the year.
Quarter in Review
Air Group’s consolidated results reported in the fourth quarter and full year 2024 include Hawaiian Airlines as of September 18, 2024 while prior comparable periods exclude any Hawaiian results. Discussion of fourth quarter results and forward-looking guidance refer to pro forma historical results as provided in prior 8-K filings and represented below.
| Q4 2024 vs Q4 2023 Pro Forma except EPS | Prior Expectation | Actual Results |
|---|---|---|
| Capacity (ASMs) | Up ~1.5% | Up 2.5% |
| RASM | Up mid-to-high single digits | Up 7.0% |
| CASMex | Up low-double digits | Up 8.6% |
| Adjusted earnings per share | $0.40 to $0.50 | $0.97 |
Our GAAP pretax margin for the fourth quarter was 2.2% and GAAP earnings per share was $0.55. On an adjusted basis, our pretax margin was 3.9% and earnings per share was $0.97, which exceeded our latest guidance by approximately $0.50 at the midpoint driven by revenue and cost improvement across our business as well as lower non-operating expenses. Due to these same out-performance factors, full year adjusted EPS of $4.87 also surpassed the better end of our prior guidance range.
Fourth quarter revenue was stronger than expected across both Alaska and Hawaiian, building on the strength seen in the fall, and exiting the year with momentum driven by sustained leisure demand and an uptick in corporate travel which improved close in demand. With mild winter weather to end the year, we delivered reliable operational performance for our guests throughout the holiday travel period, with higher-than-expected completion rate and load factor. After inflecting positive in August, unit revenues improved nearly 6 points sequentially from 1% in the third quarter to 7% in the fourth quarter. This momentum has continued, with ongoing close-in strength in early Q1 bookings. Combined with a stable industry capacity backdrop, we are encouraged by these early indications for Q1 and a constructive start to 2025.
Unit cost performance in the fourth quarter also exceeded our guidance, up 8.6% as compared to pro forma 2023, as disciplined non-fuel cost performance offset higher performance-based pay accruals and better completion rates drove higher capacity. Throughout 2024, unit costs remained pressured from constrained capacity as a result of aircraft delivery delays, but are expected to improve through 2025 as we normalize resource levels and capacity compared to 2024.
Alaska Accelerate
Following a great close to 2024, we continue to build on our strong foundation and execute on Alaska Accelerate – our vision for the future. This strategy is focused on building scale, relevance and loyalty to connect our guests to the world with a remarkable travel experience rooted in safety, care and performance and deliver $1 billion in incremental profit over the next 3 years.
Tags: Alaska Air Group
