Alaska Air (NYSE:ALK) stated in a company filing on Thursday that its long-term outlook may be impacted by the temporary grounding of Boeing’s (NYSE:BA) 737 Max 9 fleet. The grounding of the airline’s 737 Max 9 fleet, supplied by aerospace company Boeing, has resulted in lost capacity for Alaska Air. Consequently, the company expects its long-term growth target to be at the lower end of the range of 4% to 8%.
Door Plug Panel Incident Impacts Bottom Line
Following the door plug panel incident where a door plug panel detached mid-flight on an Alaska Air (ALK) plane, the company decided to ground its 737 MAX 9 fleet. This incident is expected to have a negative impact on its bottom line by around $150 million.
Earlier this month, Alaska Air revised its Q1 guidance and now expects that its adjusted loss will narrow to be in the range of $0.45 to $0.55 per share as compared to a loss of $0.62 per share in the year-ago quarter.
ALK did receive partial compensation from Boeing after the incident, which positively impacted its updated Q1 forecast.
Furthermore, the company had also stated earlier that its capacity outlook for the full year remained uncertain due to the uncertainty surrounding the timing of Boeing’s aircraft deliveries amid the scrutiny from the Federal Aviation Administration (FAA) and Department of Justice (DoJ).
Alaska Air is expected to report its first-quarter results on April 18.
Is ALK a Good Buy?
Analysts remain bullish about ALK stock with a Strong Buy consensus rating based on nine Buys and two Holds. Year-to-date, ALK stock has gone up by about 10% and the average ALK price target of $48 implies an upside potential of 11.6% at current levels.
