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Alaska Airlines Makes Record $10.4b Revenue in 2023

Alaska Airlines Reports 2023 Record Revenue and Plans Hawaiian Airlines Acquisition

Alaska’s Alaska Air Group Inc. (NYSE: ALK) has published its financial report for both Q4 and the entirety of 2023, and provided updates on its plans to acquire Hawaiian Airlines. The airline reported $2.6 billion in operating revenue for the fourth quarter and a record operating revenue of $10.4 billion for the year.

“Air Group’s 2023 accomplishments were significant,” said CEO Ben Minicucci. “I want to thank our people for delivering a reliable operation, industry-leading cost performance, and a strong 7.5% adjusted pretax margin. As we navigate early 2024, we remain steadfast in our commitment to safety, providing a premium experience for our guests, and delivering durable financial performance. I am also grateful for how the team has rallied together to demonstrate tremendous professionalism and care in the midst of a challenging start to 2024 for them and our guests. Alaska is a resilient company with a track record of operational excellence, and we are confident in the plans we have laid out to ensure that success moving forward.”

A Closer Look at Alaska Airlines’ Revenue and Earnings

Alaska Airlines

For the fourth quarter, the company reported a net loss of $2 million ($0.02 per share) and for the entire 2023 year, a net income of $235 million ($1.83 per diluted share). By comparison, in 2022, the company made $22 million ($0.17 per diluted share) in the fourth quarter and $58 million ($0.45 per diluted share) for the year.

Excluding special items and adjustments for fuel hedge accounting, the airline’s fourth quarter net income was $38 million ($0.30 per diluted share). For the whole year, it was $583 million ($4.53 per diluted share). In 2022, these figures were $118 million ($0.92 per diluted share) for the fourth quarter and $556 million ($4.35 per diluted share) for the full year.

In 2023, Alaska Airlines achieved an adjusted pretax profit margin of 7.5%. The company reported an operating revenue of $2.6 billion for the fourth quarter of 2023 and made a record $10.4 billion over the year.

The airline cut operational expenses apart from fuel and special items by 6.6% in the fourth quarter and by 2.6% over the year compared to 2022. Over the year 2023, the airline’s operating cash flow came out to $1.1 billion.

In the fourth quarter, the company bought back 2 million shares for $75 million. For the year, Alaska Airlines repurchased 3.5 million shares totaling $145 million.

Bank card partner commissions from the airline’s loyalty program brought in over $400 million in the final quarter and reached $1.6 billion for the year, growing by 13% compared to 2022.

Air Group rewarded its employees with $200 million in incentive pay for reaching certain goals related to profits, sustainability, operations, and safety in 2023. This bonus is more than three weeks’ worth of pay for most staff members.

Alaska Airlines Strengthening the Balance Sheet

The airline navigates early 2024 confidently, maintaining a solid debt-to-capitalization ratio and repaying $282 million in debt throughout 2023, staying true to its conservative financial principles. Alaska ended the year with a debt-to-capitalization ratio of 46%, within its target range of 40% to 50%.

Operational and Strategic Growth

Alaska Airlines announced a planned acquisition of Hawaiian Airlines last year, which would significantly expand its network. The airline agreed to buy Hawaiian Airlines at $18 per share. The merged airline will keep both the Alaska and Hawaiian names and expand routes across the Pacific.

Alaska also introduced its first cargo plane into service, a Boeing 737-800, and plans to add another by early 2024.

The airline also announced a partnership with Porter Airlines, which will allow more travel options to Canada from the West Coast. Starting in 2024, Alaska will launch new flights connecting Seattle with Toronto, Anchorage with New York JFK and San Diego, and Portland with Nashville.

Alaska extended its partnership with Condor Airlines, enabling both airlines to sell seats on each other’s flights.

The airline also completed the sale of ten Airbus A321neo planes to American Airlines, with most sales happening in the last quarter and a couple in January.

Alaska has also improved the passenger experience, introducing touch-free payment services, Tap to Pay, for in-flight sales.

Alaska Airlines Boeing 737-9 MAX Incident

Following the depressurization event on Alaska Airlines Flight 1282 in January, Alaska grounded its 737-9 MAX fleet, pending an NTSB and FAA investigation.

Speaking with NBC Nightly News, Alaska Airlines CEO, Ben Minicucci, expressed anger over the incident.

Alaska Airlines announced it would re-start 737-9 MAX flights on Friday, January 26, following the FAA’s guidance for inspection and maintenance of the door plug fasteners. The airline expects to complete the final inspections all 67 of its 737-9 MAX aircraft by next week. Each aircraft will return to service after Alaska Airlines maintenance teams complete the inspection and resolve any findings. Alaska also completed requested inspections of all 737-900ER aircraft in its fleet, following the FAA’s notification of door plug faults found on this jet. The airline reported only one minor finding on this aircraft type which was immediately corrected.

Alaska Airlines is closely monitoring and has conducted a thorough review of Boeing’s production quality and control systems, including the aircraft maker’s production vendor oversight to enhance quality control on new aircraft. Alaska also increased its quality oversight program at the Boeing production facility, expanding the team to validate work and quality of their aircraft as they progress through the manufacturing process.

Commitment to Sustainability

Even amid expansion, Alaska has kept sustainability in focus. The airline established milestone partnerships and programs allow passengers to engage in carbon offsetting options directly.

Alaska partnered with Norwegian climate-tech company CHOOOSE, offering customers the ability to purchase sustainable aviation fuel credits or support nature-based climate projects upon check-out.

Additionally, through Alaska’s Care Miles program, Mileage Plan members donated over 100 million miles to 22 different charities in 2023.

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