Alaska
Which Is A Better Pick – Alaska Air Or UAL Stock?
Given its attractive valuation, we believe Alaska Air stock (NYSE: ALK) is a better pick than its peer United Airlines stock (NASDAQ
NDAQ
Interestingly, ALK has had a Sharpe Ratio of -0.1 while the figure stood at 0.1 for UAL, lower than 0.6 for the S&P 500 Index over the same period. This compares with the Sharpe of 1.3 for the Trefis Reinforced Value portfolio. Sharpe is a measure of return per unit of risk, and high-performance portfolios can provide the best of both worlds.
1. United Airlines’ Revenue Growth Is Slightly Better
- United Airlines’ revenue growth has been slightly better, with a 26% average annual growth rate in the last three years, compared to 23% for Alaska Air.
- The rise in revenues for both airlines over the recent years can be attributed to a rebound in air travel demand, with passenger traffic and ticket yield rising meaningfully in the recent past.
- For perspective, Alaska Air’s available seat miles declined 21% between 2019 and 2021 but surged 16% in 2022. Similarly, its passenger revenue per available seat mile fell 11% between 2019 and 2021 but rose 35% y-o-y in 2022.
- In comparison, United Airlines’ ASM decreased 27% between 2019 and 2021 before rising 39% y-o-y in 2022. Its PRASM declined 19% and increased 43% over the same period, respectively.
- Looking at the last twelve months, United Airlines’ 43% sales growth has fared better than 26% for Alaska Air.
- Our Alaska Air Revenue Comparison and United Airlines Revenue Comparison dashboards provide more insight into the companies’ sales.
2. United Airline Is More Profitable
- Alaska Air’s reported operating margin slid from 12% in 2019 to -50% in 2020 before recovering to 1% in 2022. In comparison, United Airlines’ operating margin fell from 9% in 2019 to -49% in 2020 but rose to 2% in 2022.
- Looking at the last twelve-month period, United Airlines’ operating margin of 5% fares better than 1% for Alaska Air.
- 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.
- Our Alaska Air Operating Income Comparison and United Airlines Operating Income Comparison dashboards have more details.
- Looking at financial risk, both are comparable. While Alaska Air’s 122% debt as a percentage of equity is lower than 194% for United Airlines, its 16% cash as a percentage of assets is lower than 26% for the latter, implying that Alaska has a comparatively better debt position, but United Airlines has more cash cushion.
3. The Net of It All
- We see that United Airlines has seen superior revenue growth, is more profitable, and has more cash cushion. It is also trading at a slightly lower valuation multiple.
- However, looking at prospects, using P/S as a base, due to high fluctuations in P/E and P/EBIT, we believe Alaska Air will likely offer better returns over the next three years.
- If we compare the current valuation multiples to the historical averages, ALK fares slightly better. Alaska Air stock trades at 0.5x sales compared to its last five-year average of 1.1x, and United Airlines stock trades at 0.3x revenues vs. the last five-year average of 0.6x.
- Our Alaska Air Valuation Ratios Comparison and United Airlines Valuation Ratios Comparison have more details.
While ALK may outperform UAL in the next three years, it is helpful to see how Alaska Air’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.
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Alaska
Santa catches a ride with troops to bring Christmas to Alaska village
YAKUTAT, Alaska — Forget the open-air sleigh overloaded with gifts and powered by flying reindeer.
Santa and Mrs. Claus this week took supersized rides to southeast Alaska in a C-17 military cargo plane and a camouflaged Humvee, as they delivered toys to the Tlingit village of Yakutat, northwest of Juneau.
The visit was part of this year’s Operation Santa Claus, an outreach program of the Alaska National Guard to largely Indigenous communities in the nation’s largest state. Each year, the Guard picks a village that has suffered recent hardship — in Yakutat’s case, a massive snowfall that threatened to buckle buildings in 2022.
“This is one of the funnest things we get to do, and this is a proud moment for the National Guard,” Maj. Gen. Torrence Saxe, adjutant general of the Alaska National Guard, said Wednesday.
Saxe wore a Guard uniform and a Santa hat that stretched his unit’s dress regulations.
The Humvee caused a stir when it entered the school parking lot, and a buzz of “It’s Santa! It’s Santa!” pierced the cold air as dozens of elementary school children gathered outside.
In the school, Mrs. Claus read a Christmas story about the reindeer Dasher. The couple in red then sat for photos with nearly all of the 75 or so students and handed out new backpacks filled with gifts, books, snacks and school supplies donated by the Salvation Army. The school provided lunch, and a local restaurant provided the ice cream and toppings for a sundae bar.
Student Thomas Henry, 10, said while the contents of the backpack were “pretty good,” his favorite item was a plastic dinosaur.
Another, 9-year-old Mackenzie Ross, held her new plush seal toy as she walked around the school gym.
“I think it’s special that I have this opportunity to be here today because I’ve never experienced this before,” she said.
Yakutat, a Tlingit village of about 600 residents, is in the lowlands of the Gulf of Alaska, at the top of Alaska’s panhandle. Nearby is the Hubbard Glacier, a frequent stop for cruise ships.
Some of the National Guard members who visited Yakutat on Wednesday were also there in January 2022, when storms dumped about 6 feet of snow in a matter of days, damaging buildings.
Operation Santa started in 1956 when flooding severely curtailed subsistence hunting for residents of St. Mary’s, in western Alaska. Having to spend their money on food, they had little left for Christmas presents, so the military stepped in.
This year, visits were planned to two other communities hit by flooding. Santa’s visit to Circle, in northeastern Alaska, went off without a hitch. Severe weather prevented a visit to Crooked Creek, in the southwestern part of the state, but Christmas was saved when the gifts were delivered there Nov. 16.
“We tend to visit rural communities where it is very isolated,” said Jenni Ragland, service extension director with the Salvation Army Alaska Division. “A lot of kids haven’t traveled to big cities where we typically have Santa and big stores with Christmas gifts and Christmas trees, so we kind of bring the Christmas program on the road.”
After the C-17 Globemaster III landed in Yakutat, it quickly returned to Joint Base Elmendorf-Richardson in Anchorage, an hour away, because there was nowhere to park it at the village’s tiny airport. Later, it returned to pick up the Christmas crew.
Santa and Mrs. Claus, along with their tuckered elves, were seen nodding off on the flight back.
Alaska
Trump Wants Denali Renamed
Opposition to President-elect Trump’s renewed suggestion to change the name of Alaska’s 20,310-foot mountain back to McKinley includes many Alaskans, including Indigenous people, and the state’s two Republican senators. Sen. Lisa Murkowski advocated for years to remove the name of the nation’s 25th president, who never visited the mountain or had any connection to it, the Anchorage Daily News reports. “There is only one name worthy of North America’s tallest mountain: Denali—the Great One,” Sen. Lisa Murkowski wrote on X.
Trump brought up the idea in a speech Sunday at Turning Point USA’s AmericaFest in Phoenix, where he praised William McKinley as a fellow supporter of protective tariffs. “We’re going to bring back the name of Mount McKinley because I think he deserves it,” Trump said. In 2016, Trump had said he might change the name back, a notion he dropped when Alaska’s senators objected, per the AP. Denali is the Koyukon Athabascan name that was used by Indigenous people for centuries. It translates to “the high one” or “the great one.”
The federal government named it Mount McKinley in 1896, which stood until Barack Obama’s administration in 2015. That switch came after years of effort by state officials and Native groups. Sen. Dan Sullivan once told an Alaska Federation of Natives conference that Trump made the same suggestion when he and Murkowski met with him at the White House in 2017. The senators objected vehemently, he said. An aide texted the Daily News that “Sen. Sullivan like many Alaskans prefers the name that the very tough, very strong, very patriotic Athabaskan people gave the mountain thousands of years ago—Denali.” (More President-elect Trump stories.)
Alaska
Alaskan-named snowplows revealed by state
ANCHORAGE, Alaska (KTUU) – Coming soon to Juneau-area roads; a trio of festively-named snowplows!
After hundreds of suggested names were entered in its annual naming contest, the Alaska Department of Transportation and Public Facilities announced Monday that it had narrowed its search down to three winning names for three of its snowplows.
The winning names were Berminator, Salt-O-Saurus Rex, and Ka-PLOW.
The names were chosen by DOT staff who felt they were most appropriate and represented Alaska the best, according to Eli Kesten-Brackett, a project assistant with the department.
“Since they move in formation, [DOT] thought it’d be cool to have them all named as a unit,” Kesten-Brackett said.
The Name-A-Snowplow contest that ended on Nov. 28 saw over 400 individual entries from residents around the state.
Kesten-Brackett said after noticing the popularity of similar contests in other snow-laden states in the Lower 48, the state thought a way to get people’s creative juices flowing was what Alaska needed.
“We thought this would be an awesome way to foster community engagement,” Kesten-Brackett said.
The winning name in the inaugural contest last year was Darth Blader, according to Kesten-Brackett.
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