On Jan. 27, Alaska Air Group Inc. (ALK, Financial) announced encouraging earnings results for its fourth quarter and full year ended Dec. 31, 2021. It also provided a solid outlook for 2022’s first quarter, which ends March 31.
Alaska Air's fourth quarter and full year 2021 results reflect a disciplined focus on cost management and a measured approach to bringing back capacity in recovery. In addition to delivering profitability in the second half of the year, Alaska Air's financial performance enabled the company to restore its debt-to-capitalization ratio to pre-pandemic levels in the fourth quarter, priming the airline for profitable growth in 2022 even as many peers continue to struggle.
Reported net income for the fourth quarter on a GAAP basis was $18 million, or $0.14 per diluted share. For the full year, net income was $478 million, or $3.77 per diluted share. These results compare to a net loss of $447 million, or $3.60 per share, in the fourth quarter of 2020 and a net loss of $1.3 billion, or $10.72 per share, for full-year 2020.
Excluding special items and mark-to-market fuel hedge accounting adjustments, the company recored a net loss of $31 million, or $0.24 per diluted share, for the fourth quarter and a net loss of $256 million, or $2.03 per share, for the year, the company added. These results compare to a net loss of $316 million, or $2.54 per share, for the fourth quarter of 2020 and a net loss of $1.3 billion, or $10.17 per share, for full-year 2020.
The airline’s stock closed at $54.74 on Monday, up 4.77%, or $2.49 per share, following the news. After hours, it fell to $54.40.
"While recovery in our industry is never linear, our caring and dedicated people and the strength of our competitive advantages position us for success no matter what challenges we face," said CEO Ben Minicucci in a statement. "Despite operational disruption from Omicron and severe winter weather in December, our fourth quarter adjusted pre-tax margin was 2.4%, marking one of the industry's most profitable performances in Q4 and the second half of the year. We have laid a solid foundation for our return to 100% of our pre-COVID flying by summer 2022 and we're poised to grow from there."
On Monday, Alaska Air's Mileage Plan program announced it will be introducing more flexible rewards on American Airlines (AAL, Financial). “As of March 1, 2022, Alaska Mileage Plan award pricing on American Airlines will have more ‘variability.’ We don’t have any details yet on what these changes will look like, but rather just have a heads up that this is changing.”
The announcement added that Mileage Plan “should continue to have the same award pricing when American has saver level award availability, but now members will also be able to redeem for travel on American on other flights as well. While this is unlikely to represent some amazing deal for the average member, more ways to redeem miles are typically a good thing, assuming nothing is being taken away (and there’s no reason to believe anything is being taken away).”
Others were wary. “Alaska’s domestic award chart now states that American awards ‘start’ at the aforementioned levels,” noted popular travel blog The Points Guy, “which implies that the rates could be increased based on demand and other factors. With this move, Alaska appears to be transitioning to a pricing model similar to the one that American has implemented for its own flights in recent years.”
