Alaska Air Group Inc. (ALK): Takeaways from virtual group meeting

Research evidence excerpt

Alaska Air Group Inc. (ALK): Takeaways from virtual group meeting

Goldman Sachs Alaska Air Group Inc. (ALK)

next year on last week’s earnings conference call, which has historically been noted

as the required growth rate to hold CASM ex-fuel flat. Management reiterated

several headwinds noted on the call, including airport costs, the end of the CFM

LEAP engine maintenance honeymoon period (powers the company’s Boeing 737

MAX fleet), and potentially new joint collective bargaining agreements for its front

line employees. Several tailwinds were also discussed including upgauging as the

company takes deliveries of MAX 10s, the retirement of maintenance intensive older

aircraft, further labor and overhead efficiencies, and tech investment productivity

gains. Management did not take flat CASM ex-fuel off the table noting the team

would work to find offsets to next year’s headwinds, but in our view holding CASM

ex-fuel flat would be challenging given the expected headwinds (we are forecasting

2027 CASM ex-fuel +~1%).

n Hawaii: Management reiterated a constructive outlook on Hawaii, describing the

recent weakness as transitory rather than structural and noting booking trends

pointed to improvement. The company noted that Hawaii was the strongest part of

its network in 2025, with connectivity benefits from rebanking, integration synergies,

and loyalty initiatives continuing to perform well. Performance in 2026 has been

pressured by a longer-than-expected impact to demand from the historical rain

fall/flooding in Hawaii earlier this year in addition to capacity growth well above

most of the rest of the domestic US. As previously stated, management called out a

~3 point RASM headwind in 2Q that is expected to slightly narrow to a 2 to 3 point