Executive Summary

Q4 delivered revenue of $3.53B and adjusted EPS of $0.97, materially above company guidance midpoint (~$0.50 EPS beat), driven by stronger unit revenues, cost control and lower non‑operating expense; GAAP EPS was $0.55 .
Unit revenues accelerated sequentially (RASM +7% YoY in Q4 vs +1% in Q3) amid sustained leisure demand, strengthening corporate, and improved operations; CASMex rose 8.6% vs pro forma 2023 but better than expected, aided by discipline and higher completion .
2025 outlook maintained: Q1 capacity +2.5–3.5%, RASM up high‑single digits, CASMex up low‑to‑mid singles, Q1 EPS loss ($0.70)–($0.50); FY25 EPS “> $5.75” and no margin dilution in year 1 of Hawaiian integration .
Strategic execution/catalysts: codeshare ramp (double‑digit share of bookings), rebanking improving connectivity (SEA connecting pax +~20%), premium cabin strength, and Seattle long‑haul gateway (NRT in May, ICN in Oct) underpin synergy unlock toward $1B pretax profit over 3 years .

What Went Well and What Went Wrong

What Went Well
- Revenue outperformance and EPS beat: adjusted EPS $0.97 vs company guide of $0.40–$0.50; strength tied to revenue, cost improvement and lower non‑op (interest/tax) .
- Demand/pricing momentum: December exceeded expectations; RASM +7% YoY; corporate revenue +8% in Q4 with strong tech/pro services; premium cabins revenue +10–11% with paid first‑class load factor 75% (+3 pts) .
- Early integration/commercial traction: double‑digit codeshare booking contribution in Dec; SEA rebanking lifted connecting pax ~20%; Neighbor Island unit revenues up double digits; December was Hawaiian’s best month on adjusted pretax margin .
What Went Wrong
- Unit costs still elevated: CASMex +8.6% vs pro forma 2023 in Q4; 2025 guide includes ~1.5 pts CASM pressure from the new FA contract if ratified .
- International to Hawai‘i remains challenged (gradual improvement but not embedded in targets); recovery would be upside rather than base case .
- Leverage higher post‑acquisition: debt/capital 58% (vs 46% 2023) and net debt/EBITDAR 2.4x as of year‑end; management targets <1.5x by 2026 .

Financial Results

Sequential trend (Q2 → Q3 → Q4 2024)

Metric	Q2 2024	Q3 2024	Q4 2024
Total Operating Revenue ($MM)	$2,897	$3,072	$3,534
GAAP Diluted EPS ($)	$1.71	$1.84	$0.55
Adjusted EPS ($)	$2.55	$2.25	$0.97
Pretax Margin (GAAP)	10.9%	10.7%	2.2%
Adjusted Pretax Margin	15.8%	13.0%	3.9%

Year-over-year (Q4 2023 → Q4 2024)

Metric	Q4 2023	Q4 2024
Total Operating Revenue ($MM)	$2,553	$3,534
GAAP Diluted EPS ($)	$(0.02)	$0.55
Adjusted EPS ($)	$0.30	$0.97
Pretax Margin (GAAP)	0.2%	2.2%
Adjusted Pretax Margin	2.2%	3.9%
RASM (¢)	14.95	15.54
CASMex (¢)	10.31	11.57

Estimates (S&P Global) vs Actuals — Q4 2024

Consensus EPS and revenue were unavailable due to an S&P Global request‑limit error at time of retrieval; as a result, “vs estimates” deltas are not shown. Management indicated adjusted EPS exceeded internal guidance by ~$0.50 at the midpoint .
Note: S&P Global consensus values were unavailable at run time.

Segment breakdown — Q4 2024

Segment ($MM)	Revenue	Income (Loss) Before Tax
Alaska Airlines	$2,311	$142
Hawaiian Airlines	$774	$(44)
Regional	$447	$28
Consolidating & Other	$2	$11
Adjusted Air Group	$3,534	$137
Adjustments (Special/MTM/Other)	—	$(58)
Consolidated	$3,534	$79

Key KPIs

KPI	Q3 2024	Q4 2023	Q4 2024
ASMs (MM)	19,847	17,077	22,744
RPMs (MM)	16,970	14,153	19,068
Load Factor (%)	85.5	82.9	83.8
Yield (¢)	16.62	16.43	16.67
RASM (¢)	15.48	14.95	15.54
CASMex (¢)	10.16	10.31	11.57
Econ Fuel ($/gal)	2.61	3.42	2.54
Fuel Gallons (MM)	240	204	279

Balance Sheet/Leverage (Year‑end)

Debt/capitalization: 58% . Adjusted net debt/EBITDAR: 2.4x .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Capacity (ASMs) vs pro forma 2024	Q1 2025	—	Up 2.5% to 3.5%	New
RASM vs pro forma 2024	Q1 2025	—	Up high‑single digits	New
CASMex vs pro forma 2024	Q1 2025	—	Up low‑ to mid‑single digits	New
Adjusted EPS (loss)	Q1 2025	—	($0.70) to ($0.50)	New
Capacity (ASMs) vs pro forma 2024	FY 2025	—	Up 2% to 3%	New
Adjusted EPS	FY 2025	≥$5.75 (Investor Day)	>$5.75	Maintained

Management also reiterated no margin dilution in year 1 of integration and targets $1B incremental pretax profit over three years (≥$500M synergies) .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q4 2024)	Trend
Unit revenue momentum	Q2: premium outperformed; PRASM soft YoY but improving; Q3: RU inflected positive, corporate strengthened	RASM +7% YoY; sequential step‑up from +1% in Q3; Dec strength	Improving
Costs/CASM ex	Q2: CASMex -2% YoY; Q3: +6.9% YoY with delivery delays	Q4 CASMex +8.6% YoY vs pro forma; guide Q1 up low‑to‑mid; FA contract adds ~1.5 pts in 2025	Near‑term headwind, easing 2H25
Integration & synergies	Investor Day: ≥$500M synergies; no dilution in 2025	Codeshare double‑digit bookings; SEA rebanking +~20% connecting pax; Hawaiian profitable in Dec; Q2–Q4 profitability expected	On track/accelerating
International expansion	Gateway plan announced: SEA–NRT/ICN; 12 destinations by 2030	NRT bookings show 56% local; 25% flow from east of Rockies; launch in May/Oct	Building
Corporate demand	Q2/Q3 steady recovery, tech/professional strong	Q4 corporate +8%; Dec +35%; held managed business +20%; Q1 set‑up strong	Strengthening
Cargo/Amazon	Q3: A330 freighters scaling	Flew 6 Amazon freighters in Q4; 10 by April; freighter cost run‑rate rising as fleet ramps	Ramping
Supply chain/Boeing deliveries	Q3 constrained capacity from delays	2025 assumes ~14 MAX and 3 787 deliveries; flat growth on Alaska assets; higher Hawaiian utilization	Moderating constraint

Management Commentary

Strategy: “We’re set to unlock $1 billion in incremental pretax profit over the next 3 years…with at least $500 million of synergies” .
Demand/commercial: “Codesharing…represented double‑digit percentages of bookings…SEA connecting passengers are up nearly 20%” .
Profitability cadence: “Legacy Alaska assets are expected to break even in Q1…Hawaiian expected to be profitable from Q2 to Q4” .
Cost outlook: “Unit costs up low to mid‑single digits in Q1…back‑half benefits from synergy capture and A321 utilization” .
Premium/loyalty: “First and Premium Class revenues were up 10% and 11%…Paid first‑class load factor was 75%” .

Q&A Highlights

Network/connecting strategy: Rebanking and aircraft reallocation are core levers; launched 19 seasonal markets to replace underperformers; connectivity gains off low winter base but beneficial .
Corporate recovery: Q4 corporate +8%; held corporate revenues up ~20% entering Q1; outlook positive across large accounts .
CASM cadence: Toughest comp in Q2; improvement expected in 2H as synergies/productivity ramp; RASM expected to outperform CASM in 2025 .
Integration timing: Single loyalty solution by summer 2025 (premium card in Oct) and single PSS by April thereafter; “hard dates” on track .
Cargo scaling: Six of 10 Amazon freighters flying in Q4; expect all 10 by April then steady‑state run rate .

Estimates Context

S&P Global consensus EPS and revenue for Q4 2024 were unavailable at retrieval due to request‑limit errors; therefore, vs‑consensus comparisons are not shown. Management noted adjusted EPS exceeded internal guidance midpoint by ~$0.50, aided by better revenue/costs and non‑op items (interest renegotiation, tax true‑up) .
Where sell‑side consensus is needed for modeling, we recommend refreshing S&P Global estimates post‑publication.

Key Takeaways for Investors

Revenue momentum and operational reliability are translating into earnings beats; the sequential RASM inflection alongside premium strength and corporate recovery supports a constructive 2025 setup .
CASM pressure persists near‑term (labor and integration), but synergy capture, productivity, and higher Hawaiian utilization point to back‑half cost improvement; watch Q2 as the toughest comp .
Integration execution is tracking: codeshare uplift, rebanking benefits, and clear timelines for loyalty/PSS increase confidence in ≥$500M synergies and “no dilution” margin target in 2025 .
International gateway adds a new growth vector (NRT/ICN) with encouraging early bookings; diversification via cargo (Amazon freighters) adds incremental margin potential .
Balance sheet is manageable despite higher leverage post‑deal (58% debt/cap; 2.4x net debt/EBITDAR) with a glidepath to <1.5x by 2026; buybacks resumed under $1B authorization .
Near‑term trading: strong Q1 RASM guide vs manageable EPS loss, plus clear integration milestones, are positive catalysts; risks include labor costs, delivery timing, and Hawai‘i international demand recovery .
Medium‑term: execution on synergies, premium/loyalty monetization, and international scaling underpin the “> $5.75” FY25 EPS and 2027 targets (EPS ≥$10; pretax margin 11–13%) .

Sources: Q4 earnings press release and 8‑K exhibits ; earnings call transcript ; Q3 2024 results press release ; Q2 2024 results press release ; Alaska Accelerate/Seattle gateway releases .

ALASKA AIR GROUP, INC. (ALK)·Q4 2024 Earnings Summary