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What’s In The Cards For Alaska Air’s Q2?

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What’s In The Cards For Alaska Air’s Q2?


Alaska Air (NYSE: ALK) will report its Q2 2023 results on Tuesday, July 25. We expect the company’s revenues to come in at $2.7 billion, slightly below the consensus estimate of $2.8 billion. This would mark year-over-year growth of about 2%. Earnings will likely come in at about $2.60 on a per-share and adjusted basis, slightly below the $2.68 consensus estimate. See our interactive dashboard analysis on Alaska Air Earnings Preview for more details on how the company’s revenues and earnings will likely trend for the quarter. So, what are some of the trends that are likely to drive Alaska Air’s results?

The company will likely continue to benefit from the robust travel demand. It should see a continued rise in total available seat miles, and the passenger load factor will likely remain strong. However, it will be a tough comparison with the prior-year quarter, which saw a record travel demand. The average ticket price has also cooled this year while overall capacity has expanded. Looking at Q1 2023, Alaska Air’s revenues were up 31%, led by a 14% rise in capacity and a 15% rise in average revenue per available seat mile to 13.98 cents.

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Looking at the bottom line, Alaska Air reported a $0.62 loss per share on an adjusted basis in Q1, compared to a $1.33 loss per share in the prior-year quarter. The company’s average fuel price per gallon stood at $3.41 in Q1, and it should be lower in Q2 vs. its prior-year figure of $3.76. The average U.S. Gulf Coast Kerosene Jet fuel price per gallon fell from $3.90 (end of June last year) to $2.40 now. Now that fuel prices have cooled compared to last year, the company will likely see its operating margin expand. After seeing a sharp decline from 12% in 2019 to -50% in 2020 due to the impact of the pandemic, Alaska Air’s operating margin has recovered to 1% in 2022. Our Alaska Air’s Operating Income Comparison dashboard has more details.

Looking at ALK’s stock price, we believe that it has some room for growth. We estimate Alaska Air’s valuation to be $60 per share, about 14% above its current price of $52. Our forecast is based on a 10x P/E multiple for ALK and expected earnings of $6.21 on a per-share and adjusted basis for the full-year 2023. The company has guided for adjusted EPS to be in the range of $5.50 to $7.50 for the full-year 2023. The company expects its pre-tax margin to be between 14% and 17% for the year, implying margin expansion in the coming quarters. Alaska Air’s margin metric is partly being weighed down by the costs associated with the retirement of its Airbus fleet. Looking forward, the company is likely to have a better margin profile with lower costs associated with pilot training.

While Alaska Air’s stock looks like it has some room for growth, check out how Alaska Air Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

What if you’re looking for a portfolio that aims for long-term growth? Here’s a value portfolio that’s done much better than the market since 2016.

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Alaska

University of Alaska announces initial agreement with graduate workers on contract

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University of Alaska announces initial agreement with graduate workers on contract


By Andrew Kitchenman, Alaska Beacon

Updated: 48 minutes ago Published: 1 hour ago

The University of Alaska and the Alaska Graduate Workers Association have reached an agreement on a labor contract that would last from July through the end of 2026, the university said Tuesday.

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The university described the pact as a “tentative initial agreement” that must go through more steps. The agreement must be approved by the university Board of Regents and the state Department of Administration, as well as be ratified by the union. The university plans to submit the request for the Legislature to fund it before the end of the legislative session, scheduled to happen by May 15.

UA President Pat Pitney said the university administration’s goal throughout negotiations was to support “fair compensation increases” for graduate students with a contract that was financially sustainable.

“I’m incredibly grateful for the hard work put in over the last several days that allowed us to reach an agreement,” Pitney said in the prepared statement announcing the agreement. “We look forward to submitting it for legislative consideration this session.”

Union bargaining committee member Abigail Schiffmiller said Tuesday evening that the union aims to ratify the agreement within 24 hours to allow time for the Legislature to fund it.

Schiffmiller, a Ph.D. student and research assistant in biology at the University of Alaska Fairbanks, said the agreement addresses all of the critical issues raised by union members. They include increasing pay, allowing bargaining over health insurance in the future, and requiring that if employees lose their jobs, the university must prove there was a just cause. It also allows the union to file grievances over discrimination and sexual harassment. And she said it would help both the university — by allowing students who had been under financial pressure to focus on research — as well as the state, by making the university more competitive in attracting grad students to Alaska, who may stay after they graduate.

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The graduate student workers voted to unionize in October and marched in protest Monday to increase pressure for a contract. On Friday, a Fairbanks Superior Court judge issued a temporary restraining sought by the university that blocked the students from striking.

The university said it took 96 days of negotiations to reach an agreement, in contrast with a national average of 465 days for a union’s first contract agreement.

The terms of the agreement include increasing minimum pay for master’s degree students by 14%, to $24.50 per hour, and by 17% for Ph.D. students, to $29 hourly, according to the university statement.

The terms include fee waivers for union members, and up to three weeks of unpaid family leave and 20 hours of scheduled leave per semester. The agreement also includes grievance procedures and continued health insurance coverage, as well as union input on future insurance changes. The cost of insurance is set to increase by $400,000, to be covered by the university, according to the statement.

The three universities in the statewide system have a total of 23 Ph.D. programs, more than 60 master’s programs, as well as graduate certificate programs.

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Originally published by the Alaska Beacon, an independent, nonpartisan news organization that covers Alaska state government.





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Six Alaska projects receive grants from DOE rural & remote clean energy program – Alaska Native News

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Six Alaska projects receive grants from DOE rural & remote clean energy program – Alaska Native News


Solar panels. Image-Public Domain

The Biden-Harris Administration’s Department of Energy Tuesday announced it has awarded more than $20 million to Alaskan communities for rural and remote clean energy projects. The six projects selected as part of the Energy Improvement in Rural and Remote Areas (ERA) grant program aim to cut energy costs, enhance climate resiliency, and support local economic development: 

  • Tanacross Solar PV and Tok Battery Energy Storace System (Native Villages of Tanacross and Tok, Alaska): $5 million grant to install 1.5MW of solar PV on the grid at the Alaska Power & Telephone power plant paired with a 1.5MHw battery energy storage system that is expected to displace more than 12,500 gallons of expensive diesel fuel each year.
  • Big Battery as our Backbone (Kokhanok Village, Alaska): $5 million grant to upgrade the Kokhanok microgrid with a 943kWh battery energy storage system and solar, PV, wind turbine and electric thermal storage heating units, significantly increasing the microgrid’s reliability and resilience.
  • New Stuyahok Solar-Battery (New Stuyahok, Alaska): $4.3 million grant to construct a 500kW solar PV array, a 540kWh battery energy storage system, and a microgrid controller – leveraging abundant summer daylight hours to displace nearly a quarter of fuel consumption for rural Yup’ik villages in the remote Dillingham region.
  • Decarbonizing the Tongass with Tribally Owned Heat Pumps (Prince of Wales Island, Alaska): $2.5 million grant for a tribally owned project to install air-source heat pumps in up to 240 tribal buildings – powered by existing clean hydroelectric resources – to help reduce residents’ energy reliance on and emissions from fossil fuel use.
  • High Penetration Solar-Battery Project (Ambler, Alaska): $2.1 million grant to upgrade an existing power plant to allow for a 400kW solar PV system and a 500kWh battery energy storage system to produce nearly a quarter of the community’s electricity and allowing the village’s diesel generators to be turned off for the first time in more than 40 years.
  • Ouzinkie Independent Power Energy Improvement Project (Spruce Island, Alaska): $1.7 million grant to construct a 160kW solar PV and 210kWh battery energy storage system for a new microgrid offering back-up power during severe weather outages and reducing electricity costs by 10% for this community of 128 indigenous residents.

Nineteen projects across 12 states and 13 Tribal nations and communities were selected for this round of ERA grant funding. Further details on the $78 million awarded is in the press release below, and you can find specific project details on the OCED website. 



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Alaska marijuana industry expert reacts to feds’ potential move to ease restrictions

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Alaska marijuana industry expert reacts to feds’ potential move to ease restrictions


JUNEAU, Alaska (KTUU) – Alaskans on Tuesday reacted to reports from multiple sources that the Biden Administration intends to reclassify regulation of cannabis from Schedule I to Schedule III, altering its categorization to match drugs considered to be less dangerous. Schedule I is the most strict, and includes drugs such as heroin and LSD. Schedule III, where cannabis is expected to soon move, includes Tylenol with codeine and anabolic steroids.

Additionally, Schedule I is a category for drugs considered to have no medical use and a high potential for abuse, whereas Schedule III is classified as having moderate to low potential for dependence, and can be used for medicinal purposes.

Attorney Jana Weltzin – who is a board member with the Alaska Marijuana Industry Association – said the potential move by the federal government would be a huge benefit for businesses, because they would no longer be treated like “drug traffickers.” She also said such a change to reschedule the drug would be a relief for many businesses, in the event that they could deduct business expenses when filing taxes.

“That’s a very helpful thing,” she said. “We go from having all this phantom income, because there are all these expenses that you have to attribute to your net income and pay taxes on. To be able to capture those regular business expenses and be able to deduct them, like a normal business, that really helps. There’s nothing about this rescheduling that hurts so far, nothing that hurts a business.”

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Weltzin said reclassifying cannabis from a Schedule I to a Schedule III substance does not necessarily mean marijuana will be legal for medical reasons across the country, and it will not legalize marijuana outright for recreational use, but it does mean the federal government recognizes it has value medically. As far as the move possibly leading to wide-sweeping change by the federal government to legalize marijuana, Weltzin said there could be unintended consequences.

“You get interstate commerce,” she said. “State of Alaska excise tax as it currently stands could be completely out the window. And then the state is out roughly $2 million a month in marijuana excise tax. And so, we have to be careful and artful about how we think about federal legalization, and really engage with the stakeholders.

“It really should be more of a state rights approach,” she continued, “rather than just a sweeping federal change, because a lot of the businesses that are built specifically under the state programs could not survive a federal landscape if it’s not done correctly.”

Several state lawmakers who were asked on Tuesday if the potential move by the federal government could disrupt any legislation in the works this session declined to comment.

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