Alaska Airlines Explores Partnership with American Airlines
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Source: stocktwits
- Strategic Partnership Potential: Alaska Airlines is exploring potential revenue-sharing agreements with American Airlines to integrate into its existing joint business arrangements with British Airways and Japan Airlines, thereby enhancing American's competitive edge against United Airlines.
- Stock Upside Expectations: Analysts predict a 29% upside for American Airlines (AAL) stock and a 42% upside for Alaska Airlines (ALK) over the next 12 months, reflecting a bullish sentiment regarding the future performance of both airlines.
- Route Expansion Plans: Earlier this year, Alaska Airlines ordered 105 narrowbody 737 Max 10 models and five 787-10 widebody aircraft to enhance its long-haul flight coverage, further solidifying its position in the aviation market.
- Market Sentiment Analysis: Despite the Middle East conflict dampening optimism around airline stocks, retail sentiment for Alaska Airlines and American Airlines remains 'extremely bullish', indicating strong investor confidence in the demand for air travel in the U.S.
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Analyst Views on AAL
Wall Street analysts forecast AAL stock price to rise
15 Analyst Rating
7 Buy
7 Hold
1 Sell
Moderate Buy
Current: 11.770
Low
11.00
Averages
17.93
High
22.00
Current: 11.770
Low
11.00
Averages
17.93
High
22.00
About AAL
American Airlines Group Inc. is a holding company. Its primary business activity is the operation of a major network air carrier, providing scheduled air transportation for passengers and cargo through its hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, D.C. and partner gateways, including in London, Doha, Madrid, Seattle/Tacoma, Sydney and Tokyo, among others. Together with its regional airline subsidiaries and third-party regional carriers operating as American Eagle. Its cargo division provides a wide range of freight and mail services, with facilities and interline connections available across the globe. It operates approximately 977 mainline aircraft supported by its regional airline subsidiaries and third-party regional carriers, which together operate an additional 585 regional aircraft. Its subsidiaries include American Airlines, Inc., Envoy Aviation Group Inc., PSA Airlines, Inc. and Piedmont Airlines, Inc.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Revenue Estimate Fluctuations: Over the past three months, EPS estimates have seen 17 downward revisions with no upward changes, while revenue estimates experienced 10 upward revisions and one downward move, reflecting increased market confidence in revenue.
- Merger Negotiation Focus: Although American Airlines has denied merger talks with United Airlines, investors remain highly attentive to management's comments on the matter, especially given the complex antitrust issues and financial risks associated with such a merger.
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- Strategic Partnership Potential: Alaska Airlines is exploring potential revenue-sharing agreements with American Airlines to integrate into its existing joint business arrangements with British Airways and Japan Airlines, thereby enhancing American's competitive edge against United Airlines.
- Stock Upside Expectations: Analysts predict a 29% upside for American Airlines (AAL) stock and a 42% upside for Alaska Airlines (ALK) over the next 12 months, reflecting a bullish sentiment regarding the future performance of both airlines.
- Route Expansion Plans: Earlier this year, Alaska Airlines ordered 105 narrowbody 737 Max 10 models and five 787-10 widebody aircraft to enhance its long-haul flight coverage, further solidifying its position in the aviation market.
- Market Sentiment Analysis: Despite the Middle East conflict dampening optimism around airline stocks, retail sentiment for Alaska Airlines and American Airlines remains 'extremely bullish', indicating strong investor confidence in the demand for air travel in the U.S.
See More
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- Existing Collaboration Foundation: The current partnership is based on codesharing and reciprocal loyalty benefits, with Alaska recently acquiring Hawaiian Airlines, and its CEO expressing excitement about organic growth plans, indicating a positive outlook for future collaboration.
- Regulatory Challenges Ahead: Any expansion would require approval from the U.S. Department of Transportation, and while international joint ventures have been common, recent scrutiny of airline partnerships may pose challenges, especially when involving two U.S. carriers.
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- Strategic Partnerships: The collaboration may include flight sharing and co-branded marketing efforts, which not only optimize resource allocation but also enhance customer experience, further solidifying their market positions.
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- Earnings Growth Expectation: American Airlines is projected to see a 22% increase in Q1 profits, with an EPS estimate of -$0.46 and revenue expected to rise 9% to $13.75 billion, indicating growth potential despite challenges.
- Revenue Estimate Fluctuations: Over the past three months, EPS estimates have seen 17 downward revisions with no upward changes, while revenue estimates experienced 10 upward revisions and one downward move, reflecting increased market confidence in revenue.
- Merger Negotiation Focus: Although American Airlines has denied merger talks with United Airlines, investors remain highly attentive to management's comments on the matter, especially given the complex antitrust issues and financial risks associated with such a merger.
- Poor Financial Performance: Characterized by high debt and limited strategic flexibility, American Airlines has underperformed in the market; despite beating EPS and revenue estimates 75% of the time over the past two years, its stock has declined over 23% year-to-date.
See More
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- Strategic Partnership Potential: Alaska Airlines is exploring potential revenue-sharing agreements with American Airlines to integrate into its existing joint business arrangements with British Airways and Japan Airlines, thereby enhancing American's competitive edge against United Airlines.
- Stock Upside Expectations: Analysts predict a 29% upside for American Airlines (AAL) stock and a 42% upside for Alaska Airlines (ALK) over the next 12 months, reflecting a bullish sentiment regarding the future performance of both airlines.
- Route Expansion Plans: Earlier this year, Alaska Airlines ordered 105 narrowbody 737 Max 10 models and five 787-10 widebody aircraft to enhance its long-haul flight coverage, further solidifying its position in the aviation market.
- Market Sentiment Analysis: Despite the Middle East conflict dampening optimism around airline stocks, retail sentiment for Alaska Airlines and American Airlines remains 'extremely bullish', indicating strong investor confidence in the demand for air travel in the U.S.
See More
American Airlines and Alaska Air Group Explore Expanded Partnership
- Partnership Expansion Talks: American Airlines is in preliminary discussions with Alaska Air Group to broaden their existing partnership, potentially integrating Alaska into American's transatlantic and transpacific joint business arrangements, thereby enhancing competitive positioning in international markets.
- Existing Collaboration Foundation: The current partnership is based on codesharing and reciprocal loyalty benefits, with Alaska recently acquiring Hawaiian Airlines, and its CEO expressing excitement about organic growth plans, indicating a positive outlook for future collaboration.
- Regulatory Challenges Ahead: Any expansion would require approval from the U.S. Department of Transportation, and while international joint ventures have been common, recent scrutiny of airline partnerships may pose challenges, especially when involving two U.S. carriers.
- Complex Coordination Requirements: The structure under discussion differs from traditional international joint ventures, involving deeper coordination, including pricing and full revenue sharing, necessitating close alignment among airline partners and regulators.
See More
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- Jobless Claims Data: The jobless claims figure expected to be released on Thursday is 210,000, with market reactions likely to influence investor sentiment; if the data exceeds expectations, it could trigger market volatility amid ongoing economic recovery concerns.
- Tesla Earnings Performance: Tesla's earnings report beat profit expectations but missed revenue forecasts, resulting in a roughly 1% decline in after-hours trading, with the stock now 22% below its December high, indicating market concerns about its growth prospects.
- ServiceNow's Challenges: ServiceNow exceeded earnings expectations and raised guidance in its latest report, yet the ongoing war in Iran is disrupting subscription growth in the Middle East, leading to a 12% drop in after-hours trading and a 33% decline year-to-date, highlighting geopolitical risks impacting business.
- Agricultural Stock Pressure: Tractor Supply hit a new 52-week low, affected by rising gasoline and fertilizer prices, reflecting challenges faced by global agriculture and potentially diminishing investor confidence in agricultural-related stocks.
See More
American Airlines and Alaska Air Explore Strategic Partnerships
- Exploring Collaboration: American Airlines and Alaska Air are exploring potential revenue-sharing arrangements, aiming to enhance their market competitiveness through strategic partnerships, particularly in route networks and customer service.
- Positive Market Response: According to Bloomberg, this initiative could attract more travelers and enhance the appeal of both airlines in a highly competitive aviation market, thereby driving revenue growth.
- Strategic Partnerships: The collaboration may include flight sharing and co-branded marketing efforts, which not only optimize resource allocation but also enhance customer experience, further solidifying their market positions.
- Industry Trend: Against the backdrop of the aviation industry's recovery, collaborations between airlines are becoming increasingly important, and this exploration reflects a growing emphasis on innovative partnership models, potentially leading to more similar strategic alliances in the future.
See More
United Airlines Lowers Profit Outlook Amid Fuel Price Surge
- Profit Outlook Cut: United Airlines has lowered its profit outlook due to a recent surge in jet fuel prices, resulting in a stock price decline that reflects the tension between strong operational execution and elevated fuel costs.
- Quant Rating Analysis: In Seeking Alpha's Quant Rating system, United Airlines holds a rating of 3.09, ranking fifth among U.S. passenger airlines, trailing behind American Airlines (AAL) and Southwest Airlines (LUV) with ratings of 4.31 and 4.12, indicating market caution regarding its future performance.
- Competitor Performance: Despite being in focus during this earnings cycle, United Airlines' rating is lower than Delta Airlines (DAL) and JetBlue Airways (JBLU), which have ratings of 3.12 and 3.10 respectively, raising concerns about its competitive position.
- Market Reaction: Analysts note that while United Airlines shows potential to recover from fuel price spikes, the market's strong reaction to its profit outlook cut may impact investor confidence significantly.
See More
