Source: Reuters Author: Deepa Seetharaman 08/25/2009
Subject Concerned: Opinion Airlines
Shares of Alaska Air Group (ALK) climbed to their highest level in six months on Aug. 25 after an analyst raised earnings estimates for the company citing its solid performance compared with its peers.
"ALK has consistently outperformed the industry this year in terms of unit revenue change," FTN Equity Capital Markets analyst Michael Derchin said in a research note.
In July, Alaska Air saw its unit revenue, or revenue earned per seat flown, slump 1.3 percent, besting the overall airline industry, which saw a decline of nearly 17 percent, he said. Unit revenue is also known as revenue per available seat mile (RASM).
Derchin now expects the company to pull off a 2009 profit of US$3.78 per share, and a 2010 profit of US$6.91 per share.
Earlier, he forecast per-share profits of US$3.06 and US$5.25 for 2009 and 2010, respectively.
"Unit revenues have been coming in better than anticipated which is offsetting higher unit costs," said Derchin, who rates the stock a "buy".
Alaska Air's shares were up US$2.73 or 11.7 percent at US$26.09 on the New York Stock Exchange on the afternoon of Aug. 25, off an earlier high at US$26.33. The stock, which was last at this level in late February, was among the biggest percentage gainers on the NYSE.