Alaska Air Group (NYSE:ALK) recently disclosed expectations of a wider Q1 loss, despite receiving an initial compensation payment of $160 million from Boeing (NYSE:BA). This compensation is in response to an incident involving a door plug panel on an Alaska Air flight in January.
Alaska stated that the accident and subsequent grounding resulted in a decline in bookings in Q1, thereby impacting its financial performance. Also, the company disclosed that it would not classify the compensation as earnings. Instead, it plans to regard it as a reduction in the value of its aircraft assets. As a result, ALK now expects a wider adjusted loss per share of $1.05 to $1.15 for Q1, compared to the earlier forecast of $0.55 to $0.45.
The consequences of the January incident are expected to continue to impact Alaska’s performance in the near term. Nevertheless, strong air travel demand, higher ticket prices, and ongoing initiatives to expand capacity should help the company restore its performance.
Is ALK a Good Stock to Buy Now?
Overall, the Street has a Strong Buy consensus rating on Alaska Air based on nine Buys and two Holds. Following a nearly 10% gain in the company’s share price over the past three months, the analysts’ average price target on ALK stock of $48.90 points to a 17.1% potential upside.
