Alaska Air Group posted weaker-than-expected first-quarter earnings Wednesday due to negative impacts of macroeconomic factors on air travel demand.
However, the parent of Alaska and Hawaiian airlines said the results reflect strong initial progress on the integration of Hawaiian and the synergies it unlocks.
It was the second full- quarter earnings report that Alaska has filed since it combined with Hawaiian. Alaska announced Sept. 18 that it had completed its $1.9 billion acquisition of Hawaiian Holdings, parent company of Hawaiian Airlines. In December, it unveiled Alaska Accelerate, the airline’s strategic vision for the combined company, which is expected to unlock $1 billion in additional pretax profit by 2027.
Alaska Air Group finished the first quarter with a net loss of $166 million, or $1.35 per share, which includes Hawaiian results, compared to a net loss of $132 million, or $1.05 per share, in the first quarter of 2024, which did not include Hawaiian results.
It reported an adjusted first-quarter net loss, excluding special items and other adjustments, of $95 million, or 77 cents per share, which includes Hawaiian results, compared to net loss of $116 million, or 92 cents per share, for the first quarter of 2024, which did not include Hawaiian results.
Total operating revenue in the first quarter rose to $3.14 billion, up 41% from $2.23 billion in the first quarter of 2024.
Ryan St. John, Alaska Air Group’s vice president of finance, planning and investor relations, told the Honolulu Star-Advertiser in an interview that travel demand for Hawaii has been more resilient than for other destinations in the combined network, and that Hawaii has led in premium revenues and credit card sign-ups.
“Hawaii has been a bright spot. Travel so far (travel demand) has been relatively resilient,” St. John said. “Premium revenues across the entire network were up about 10%, but in Hawaii they were up 17%.”
He added that, “Overall, credit card sign-ups are up 22% year over year and in Hawaii alone they are up 40%, so there are a lot of people in Hawaii who are really excited about this deal.”
St. John said United Airlines recently reported that Hawaii was doing OK for it as well, so “there’s something going on just overall, but then we are outperforming.”
“You’ll see in our results our unit revenues. When we compare ourselves to other airlines, our revenue will be up more than Delta and United,” St. John said. “And so kind of speaking back to the benefits of doing this combination and the synergies that we are getting from it, it’s helping us at the moment offset at least a little bit of the sort of headline challenges that the economy is facing.”
Alaska Airlines said in its earnings report that overall bookings have stabilized, but that recent demand softness has led it to expect a 6-percentage-point hit to revenue in the second quarter.
Alaska said it would not provide an update to its full-year 2025 guidance because of “recent economic uncertainty and volatility,” but said “we expect to be solidly profitable in 2025 even if revenue remains pressured throughout the second half of the year.”
Despite near-term uncertainty affecting the industry, Alaska stressed that its team has continued to deliver on controllable factors, including cost performance.
Alaska CEO Ben Minicucci said in a statement, “We’re growing scale, relevance and loyalty in our hubs. We’re already recognizing synergies from the combination with Hawaiian Airlines, and our employees have never been more engaged and excited about our future.
“Between the progress on our Alaska Accelerate strategic plan and the resilient business model we’ve built over decades, Alaska is well positioned to thrive in the years ahead.”
St. John said the combination with Hawaiian is on track to meet U.S. Department of Transportation and Federal Aviation Administration requirements to issue a single operating certificate this fall, and will continue moving toward full integration.
“We are only sort of two quarters into being a fully combined airline, and so there is still a lot more to go — there’s a ton of work in progress,” he said.
On Tuesday, Alaska issued a news release about its plans to bring operations closer together and create a more seamless guest travel experience by co-locating Alaska and Hawaiian stations in Los Angeles, New York JFK, Phoenix, and San Francisco.
Hawaiian Airlines spokesperson Alex Da Silva said that the terminal relocations are happening in phases. Da Silva said that a hard timeline has not been established for Hawaii, where Honolulu is now Alaska’s second-largest hub after Seattle.
Alaska also has completed co-location of Alaska and Hawaiian air cargo operations in Honolulu, Maui, Kona, and Lihue to establish a unified cargo booking system, which allows customers to conveniently book shipments across both networks.
St. John said this summer Alaska will launch a new credit card and its combined loyalty program. He said early next year Alaska expects to move to just one reservation system. He said combining IT systems and working through joint bargaining to get single contracts for labor work groups will take longer, though the process has started for pilots and flight attendants and soon will begin for ground groups.
Da Silva said that the combined organization now employs more than 30,000 people, including over 7,000 who reside in Hawaii. He said the more than 6,000 unionized Hawaiian Airlines positions in Hawaii are unaffected by the merger, and this year the carrier plans to hire hundreds of Hawaii- based positions, including pilots, flight attendants, mechanics and various roles in airport operations across the islands.
Da Silva said a majority of Hawaiian Airlines’ 1,300 noncontract employees received a permanent or interim position based in Hawaii.
He said 34 noncontract employees left Hawaiian on March 17 at the completion of their six-month interim role, and some 58 people in interim positions concluded work at the 90-day mark of the combination.
“These employees have done important work to integrate our airlines in the initial stages of our combination, and we are supporting everyone through their career transition with both a retention and a severance package, and individualized job placement services,” he said. ‘We are also encouraging employees to apply for available jobs at Alaska or Hawaiian.”
Alaska’s stock rose $1.17, or 2.6%, to $46.11 on Wednesday during the regular trading session, but then fell $2.92 or 6.3%, to $43.19 in extended-hours trading after the earnings were announced. The company will hold a conference call with analysts at 5:30 a.m. Hawaii time today.
