Alaska Airlines (ALK) saw its stock surge by 14% before noon on Tuesday, following the unveiling of a bold new plan aimed at generating an additional $1 billion in profits over the next three years. The plan, dubbed “Alaska Accelerate,” is part of the airline’s strategy to leverage its recent $1.9 billion acquisition of Hawaiian Airlines, completed in September.
The announcement includes a range of initiatives designed to boost revenue and profitability. Among the most significant is the launch of Seattle as a new “global gateway,” with direct flights to Tokyo and Seoul starting in the spring on Hawaiian Airlines’ widebody aircraft. This move aims to expand Alaska’s international presence. The airline also introduced a premium credit card to attract high-value customers.
As part of the “Alaska Accelerate” strategy, the airline is targeting profit margins between 11% and 13%, with a goal of reaching earnings per share (EPS) of at least $10 by 2027. Additionally, Alaska Airlines increased its estimated synergies from the Hawaiian Airlines acquisition to at least $500 million by 2027.
In a positive update on its near-term outlook, Alaska raised its adjusted EPS guidance for the current quarter to a range of $0.40 to $0.50, up from the previous forecast of $0.20 to $0.40. This upward revision is due to stronger-than-expected revenue performance and lower non-operating expenses. The airline noted that both October and November saw strong close-in bookings, and December revenue is outperforming expectations due to robust holiday demand.
These developments have significantly boosted investor confidence in Alaska Airlines, reflected in the sharp rise in its stock price.
