To The Moon

$Alaska Air(ALK)$ $Delta Air Lines(DAL)$  $United Airlines(UAL)$  

🎯 Executive Summary

I’m extremely confident this earnings print marks a structural inflection for Alaska Air Group $ALK. Q4 delivered Adjusted EPS of $0.43 versus $0.10 expected, a +330% beat, despite revenue of $3.63B narrowly missing the $3.64B consensus. The stock surged post earnings on management’s forecast of a “meaningful improvement” in 2026 EPS, reaffirming a long term trajectory toward $10 EPS by 2027. The dominant catalyst is the acceleration of corporate and premium travel, combined with rapid Hawaiian Airlines integration and a newly authorised $1B share repurchase program. This quarter signals a transition from post merger digestion to earnings compounding, with institutional conviction reinforced by aggressive capital return and improving forward bookings.

🐂 Bull Case

Corporate travel inflection

Managed corporate revenue rose +9% YoY in Q4, with December surging +35%. Held corporate bookings for Q1 2026 are tracking +20%, including +15% growth from the Technology sector.

Premium revenue mix expansion

Premium cabin revenue increased +7% YoY while total unit revenue grew only +0.6%. Premium now represents 36% of total revenue. Aircraft retrofits target a 29% premium seat mix by mid 2026, structurally lifting margin per ASM.

Hawaiian Airlines integration milestone

Alaska achieved a single operating certificate across Alaska and Hawaiian. Codesharing is live, integration is ahead of schedule, and Hawaiian is targeted to return to profitability by Q2 2026.

Loyalty program monetisation

Loyalty generated $2.1B in cash remuneration in FY25. Q4 loyalty revenue rose +12% YoY, with 25% of new card sign ups opting for the premium product under the new unified Atmos program.

Capital return and shareholder alignment

$1B new share repurchase authorisation. $30M repurchased in Q4, $570M in FY25. Management aims to reduce share count toward 2019 levels of ~123M, offsetting dilution from the Hawaiian acquisition.

2026 EPS acceleration

FY26 Adjusted EPS guidance of $3.50 to $6.50, midpoint $5.00 versus FY25 EPS of $2.44. Upside potential from $500M targeted synergies and improving Hawaiian profitability in 2H 2026.

🐻 Bear Case

Seasonal near term losses

Q1 2026 Adjusted EPS guided at a loss of $0.50 to $1.50 due to seasonal demand weakness across Alaska and Hawaiian routes.

Hawaiian segment drag

Hawaiian Airlines recorded a $60M pre tax loss in Q4 2025 versus $115M pre tax profit in Alaska mainline. Hawaiian margin at -7% versus Alaska mainline at +5%.

Fuel cost volatility

West Coast refining spreads remain elevated, with jet fuel at $2.57 per gallon and additional volatility flagged from early January refinery maintenance disruptions.

Leverage profile deterioration

Debt to capitalisation increased to 61% from 58% YoY due to Hawaiian debt assumption. Adjusted net debt to EBITDAR stands at 3.0x versus a long term target below 1.5x.

Boeing delivery constraints

FY26 capacity growth limited to +2% to +3% due to Boeing delays, with 14 MAX and 3 787 deliveries expected.

💰 Financial Performance Breakdown

Revenue: $3.63B in Q4 2025, +3% YoY, slight miss versus $3.64B consensus

Adjusted EPS: $0.43 versus $0.10 expected, +330% beat

Net Income: $21M

RASM: $0.156, +1% YoY

CASMex: $0.117, +1.3% YoY, below low to mid single digit guidance

Mainline pre tax income: +$115M

Hawaiian pre tax income: -$60M

Regional pre tax income: slightly positive

FY25 Operating Cash Flow: $1.2B

FY26 CapEx guidance: $1.4B to $1.5B

Premium revenue growth: +7% YoY

Loyalty revenue recognised in Q4: +12% YoY

Management reiterated the Alaska Accelerate plan as the earnings backbone, citing premium mix, corporate recovery, and loyalty monetisation as primary EPS levers.

🛠️ Strategic Headwinds and Execution Risk

Fuel refining spread volatility on the US West Coast remains a cost wild card

Hawaiian profitability must stabilise by Q2 2026 to unlock synergy targets

Debt reduction remains a medium term priority given 3.0x net debt to EBITDAR

Boeing delivery uncertainty limits growth flexibility

Despite near term EPS compression in Q1, full year guidance was reaffirmed with upside skew

🧠 Analyst and Institutional Sentiment

Sell side sentiment is improving following raised forward EPS visibility. Analysts highlight synergy execution, premium revenue expansion, and corporate travel recovery as core upside drivers.

Price target ranges remain wide, reflecting fuel and macro uncertainty, though average targets cluster materially above current price.

Institutional tone is constructive given the $1B buyback signal and FY26 EPS step change.

Options activity skewed bullish post earnings, reflecting repricing of the 2026 earnings path.

ETF exposure via airline and travel themed funds increases passive flow sensitivity to earnings momentum.

📉📈 Technical Setup After Earnings

Price surged post earnings to approximately $51.58, up +5.57% intraday.

Trend structure shows price reclaiming short term EMA bands, pushing toward upper Keltner and Bollinger envelopes.

Near term support: $48.50 to $49.20

Secondary support: $46.00

Resistance zone: $53.00 to $55.00

Momentum structure implies a potential continuation leg if price holds above the $49 region on rising volume.

Base target: $58

Stretch target: $65

Failure risk increases if price loses $46 with expanding volume and weakening RSI.

I’m using this post-earnings performance history to map volatility risk and structure. $ALK has historically experienced short-term post-earnings drawdowns, creating liquidity pockets and better risk reward zones before trend continuation. This strengthens my conviction in disciplined timing and structure-based positioning rather than chasing headline reactions.

🌍 Macro and Peer Context

Corporate travel recovery aligns with broader business spending stabilisation and improving technology sector budgets.

Fuel volatility remains linked to inflation dynamics and refining capacity constraints.

Relative to airline peers, Alaska stands out for loyalty monetisation, disciplined capacity growth, and premium seat expansion.

Sector rotation into travel and leisure remains sensitive to interest rate expectations and consumer spending resilience.

📊 Valuation and Capital Health

Forward P E compressing rapidly if FY26 EPS midpoint of $5.00 is achieved

PEG improving as earnings growth accelerates into 2026 and 2027

Debt to capitalisation at 61% remains elevated but manageable given $1.2B operating cash flow

Buyback program enhances EPS accretion and signals undervaluation conviction

Medium term operating leverage improving through premium mix, loyalty monetisation, and Hawaiian synergies

⚖️ Verdict and Trade Plan

I believe $ALK is transitioning into a multi year earnings expansion phase. Near term volatility from Q1 seasonality is a risk, but corporate bookings up +20%, premium revenue growth, and a $1B buyback create a compelling asymmetry.

Entry zone: $48 to $50

Stop level: $45

Base target: $58

Stretch target: $65+

Confirmation signals: sustained volume expansion, improving RSI trend, and bullish options flow

Upcoming catalysts: Q1 earnings, Hawaiian profitability update, fuel cost trajectory, and FY26 synergy execution milestones

🏁 Conclusion

I’m confident Alaska Air is no longer just a recovery airline but a restructuring success story with compounding EPS power into 2026 and beyond.

📌 Key Takeaways

Adjusted EPS: $0.43 versus $0.10 expected

Revenue: $3.63B, +3% YoY

FY26 EPS guidance midpoint: $5.00

Corporate bookings Q1 2026: +20%

Hawaiian Q4 pre tax loss: $60M

Key resistance: $53 to $55

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Trade like a boss! Happy trading ahead, Cheers, BC 📈🚀🍀🍀🍀 @Tiger_Earnings @Tiger_comments @TigerStars @TigerPicks @TigerObserver @TigerWire