Alaska Airlines Is Cashing In On Its Credit Card
America's fifth-largest carrier isn't flashy but it appears to be on the right track.
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The fifth-largest airline in the United States isn't making a splash by flying to London or Paris. It hasn't introduced lie-flat bed seats, nor is it trying to win over the entertainment crowd or the finance bros.
Yet to me, as a West Coast-based journalist and occasional Alaska Airlines customer, Alaska is a more interesting story than JetBlue. Alaska is a disciplined airline, with an on-time operation and low costs. It has a clear value proposition to consumers, offering them a humane experience at low fares. The people of Seattle, its biggest hub, seem to respect that, allowing Alaska to hold its competitive share despite an expansion from Delta Air Lines. Alaska’s market position is less settled in California — perhaps it has not benefited from the Virgin America acquisition as much as management hoped. But it could be worse: Alaska might be trying to acquire Spirit Airlines, and could be paying a special dividend to shareholders just for the right to close the deal.
As analyst Conor Cunningham of Melius Research put it: “In 2022, when other airlines were still riddled with Covid headwinds, Alaska was able to turn in an industry leading pre-tax margin of 7.6 percent, while tackling an aggressive single fleet transition and completing open labor contracts.”
As the No. 5 airline in a country essentially controlled by four carriers, Alaska is still undersized. But as I followed the airline's fourth quarter earnings call last week, I was impressed with some of the progress the airline is making on its commercial strategies. Here are some highlights: