Alaska Air Gains On Lower 3Q Cash Burn

Shares of Alaska Air Group increased 2.3% on Thursday after the airlines company managed to lower its daily cash burn to approximately $4 million in 3Q from approximately $5 million in 2Q.

Meanwhile, Alaska Air (ALK) reported 3Q loss of $3.23 per share, wider than both the analysts’ loss estimate of $3.01 per share and the year-ago loss of $2.63 per share. Meanwhile, its 3Q revenues of $701 million beat the consensus estimate of $678.2 million. However, revenues slumped 71% from the year-ago quarter. The company also maintained its adjusted net debt at $1.7 billion, flat from Dec. 31, 2019 levels. 

Alaska Air also announced a partnership with U.S. software giant Microsoft to reduce carbon emissions and make business travel greener in key routes by using sustainable aviation fuel in flights. Alaska said “Under the first U.S. partnership of its kind, Microsoft will purchase biofuel credits from supplier SkyNRG for flights between Seattle-Tacoma International Airport and three popular California destinations.” (See ALK stock analysis on TipRanks).

Following the 3Q results, Raymond James analyst Savanthi Syth maintained her Buy rating on the stock. She said “While the environment remains challenging, Alaska appears to be executing well on controllable factors in-line to better than peers.”

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 6 Buys and 4 Holds. The average price target of $50.00 implies upside potential of about 23.2% to current levels. Shares declined about 40.1% year-to-date.

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