Overcoming blowout crisis, Alaska Air forecasts profits

SEATTLE, Washington: This week, Alaska Air, the operator of the Boeing aircraft that suffered a mid-air cabin blowout in January, forecast stronger-than-expected earnings in the current quarter based on rising business travel demand.

Alaska also reported a smaller loss in the first quarter despite a loss of US$162 million due to the more than two-week grounding of its 737 MAX 9 fleet after the blowout incident.

Chief Financial Officer Shane Tackett said in an interview with Reuters that while leisure travel demand remains robust, corporate travel spending is now gathering steam. "Business travel is better than we expected," he said.

Other airlines have also reported a rise in corporate travel, considered a cash cow for the industry.

Tackett said that Alaska predicts the outlook for the rest of the year to be more stable than expected coming into the year.

He added that the airline now expects full-year earnings to be in the range of $3.25 to $5.25 a share, an upgrade from $3 to $5 a share.

However, he also warned that higher fuel costs were a concern for the company.

LSEG data showed that the carrier reported an adjusted loss of 92 cents per share in the March quarter, compared with analysts' average forecasts of a $1.05 loss.

Before the grounding of the MAX 9 jets, it would have reported a profit of three cents a share for the quarter, traditionally its weakest quarter. Boeing has fully compensated Alaska in cash.

Alaska forecasts a second-quarter profit of $2.20 to $2.40 per share, compared with Wall Street's estimates of $2.12.