2023-07-25 10:04:44 ET
Alaska Air Group, Inc. ( NYSE: ALK ) tumbled 10% on Tuesday morning as forecasts for revenue came in under expectations as fare prices have been dropping.
Sales for 2023 are expected to increase 8% to 10% compared to 2022. The average analyst expectation was for growth of 11%.
Airline fares in the U.S. fell 19% in June compared to a year ago on an unadjusted basis as core inflation cooled to a 4.8% year-over-year pace during the month.
On a month-to-month comparison, air fares fell 8.1% in June after declining 3% in May, retreating 2.6% in April, and dropping 6.5% in March, according to data compiled by the Bureau of Transportation Statistics.
Analysts said the downward trend is due largely to lower fuel prices and a healthier overall cost basis for carriers. While demand remains strong, it's primarily for international destinations.
For the second quarter, Non-GAAP EPS of $3 beat the average estimate by $0.30 and revenue of $2.84B beat by $70M. For the third quarter, the Seattle-based company forecast revenue up 0% to 3% from the same period in 2022.
ALK received eight Boeing ( BA ) 737-9 aircraft and six Embraer SA ( ERJ ) E175 aircraft during the quarter, bringing the totals in the Alaska and Horizon fleets to 51 and 39, respectively.
The carrier also announced new routes to Nassau from Seattle and Los Angeles and Guatemala City from Los Angeles, marking six countries that Alaska will fly to as demand for international flights outweighs demand for domestic destinations.
The disappointing revenue forecast for Alaska Air ( ALK ) pulled other airlines down. Delta Air Lines ( DAL ) dropped 3.3% , United Airlines Holdings ( UAL ) fell 4.6% and American Airlines Group ( AAL ) was lower by 3.3% .
Shares of ALK are up 22% over the past 12 months.
More on airlines:
- Alaska Air: Value Remains, But Is Now The Time To Buy?
- Alaska Air beats Q2 top and bottom line estimates; initiates Q3 and reaffirms FY23 outlook
- Airline fares fall 19% in June from a year ago
- Airline stocks ripped big gains in the first half - can the rallies extend?
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Alaska Air slumps as revenue forecast comes in weaker than expected