Alaska Air cuts Q1 EPS view to ($1.15)-($1.05) from (55c)-(45c)

Consensus is (91c). Alaska Air (ALK) said the change in its expected Q1 adjusted loss per share is due to a revision to its expected accounting treatment of Boeing (BA) compensation. Its Q1 operation and results were significantly impacted by Flight 1282 in January and the Boeing 737-9 MAX grounding which extended into February. “Absent these factors, our first quarter adjusted pretax profit would have improved approximately 80% over Q1 2023, versus our pre-grounding expectations of a 30% improvement. The improvement to our core business performance has been driven by strategic network adjustments, strong demand within the quarter, and continued recovery of West Coast business travel. Although we did experience some book away following the accident and 737-9 MAX grounding, February and March both finished above our original pre-grounding expectations due to these core improvements. As a result of the Flight 1282 accident and the Boeing 737-9 MAX grounding, we lost approximately $160 million in Q1 pretax profit, primarily comprising lost revenues, costs due to irregular operations, and costs to restore our fleet to operating service. We have received initial compensation from Boeing to address the financial damages incurred as a result of Flight 1282 and the 737-9 MAX groundings. As part of this compensation, Boeing paid Air Group approximately $160 million in cash during the first quarter. This cash payment is equivalent to the lost profits resulting from the accident and grounding in Q1 2024. Additional compensation is expected to be provided beyond Q1, the complete terms of which are confidential.”