All things considered, Alaska Air Group’s first-quarter performance was pretty solid — and investors took notice.
Following January’s Boeing 737 Max 9 door plug blowout, Alaska Airlines was forced to ground a swathe of its 737 Max fleet to conduct safety reviews. To compensate for the lost revenues from the grounding, as well as soaring costs to inspect and restore planes to regular service, Boeing cut a $162 million check to the airline. Alaska first revealed the payout in a Securities and Exchange Commission filing earlier this month.
Alaska CEO Ben Minicucci said the quarter’s results “far exceeded initial expectations.” The airline’s stock popped nearly 7% Thursday morning following its first-quarter earnings report.
The incident had a pretty significant impact on the airline’s first-quarter bottom line. The company saw an adjusted loss before income tax of $162 million with the impact of the grounding, but would have posted a $5 million adjusted income before income tax excluding that effect. Fallout from the accident similarly depressed both the company’s earnings and its year-over-year change in capacity.
Still, things could have been a lot worse for Alaska. It posted a net loss of $132 million, or $1.05 per share, for the quarter. That’s still an improvement from a net loss of $142 million, or $1.11 per share, for the first quarter of 2023. This was also slightly less than its worst-case scenario that put it at a loss of as much as $1.15 per share.
And it’s forecasting clearer skies ahead, with a second-quarter earnings-per-share guidance of between $2.20 and $2.40.
Boeing pains
Boeing hasn’t been so lucky. Its stock had its longest losing streak since 2018. Shares of the aerospace giant are down almost 32% year-to-date, making it one of the worst-performing stocks on the S&P 500 in 2024. Its shares ticked up 1% on Thursday.
The plane maker is facing two lawsuits from passengers who were aboard the Alaska flight (one of which has a $1 billion price tag) and intensifying regulatory scrutiny, including criticisms of its safety practices from the Federal Aviation Administration and blistering testimonies from whistleblowers.
All of this has dealt a painful blow to Boeing. Between January and March, the manufacturer delivered just 83 planes in its lowest quarterly deliveries since 2021, when production was still in the process of ramping up again following the pandemic.