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Indra Bhattacharjee's Avatar
published in Blogs
Apr 16, 2019

Alaska Air (ALK, $60.06) looks to double orders on grounded Boeing (BA, $375.46) 737 Max

Even though many airlines have been cancelling their Boeing Max 737 orders following two fatal crashes, Alaska Air seems to be moving in the opposite direction, having doubled its orders despite the grounded situation of the aircraft.

Following the merger of Alaska Airlines and Virgin America in 2016, Alaska's management contemplated whether to keep Airbus planes or replace them with Boeing 737s – with the expectation of making a final call by end of 2017. But with the merger execution getting tougher than expected, leading to sharp profit erosion, Alaska's management had to postpone the decision as reducing near-term capex investment became the priority. So, Alaska Air chose different fleet types - Alaska flew only Boeing 737s while Virgin America used Airbus A320-family planes.

There are two main reasons why this decision is crucial. First, there is extra complexity in terms of incremental costs of maintaining mixed fleet. Second, replacing the vast majority of existing A319s and A320s with Boeing 737 MAX may also upgrade Alaska’s fleet to a more efficient technology much faster.

But isn’t it strange that Alaska is investing on an aircraft that is still grounded?

The answer may be no, as with nearly 100 successful flight tests Boeing has already developed software fix, cockpit changes, and enhanced pilot training procedures to prevent any future accidents. It expects that the grounding would be lifted by the summer of 2019.

Alaska’s pending decision to return to a single fleet type may give it the advantage to secure rock-bottom prices for up to a decade of aircraft purchases. As of the end of 2018, Alaska’s mainline passenger fleet consisted of 159 Boeing 737s and 71 Airbus A319s, A320s, and A321neos.

Related Ticker: ALK

ALK in upward trend: 10-day moving average broke above 50-day moving average on February 21, 2024

The 10-day moving average for ALK crossed bullishly above the 50-day moving average on February 21, 2024. This indicates that the trend has shifted higher and could be considered a buy signal. In of 16 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are .

Price Prediction Chart

Technical Analysis (Indicators)

Bullish Trend Analysis

The RSI Oscillator points to a transition from a downward trend to an upward trend -- in cases where ALK's RSI Oscillator exited the oversold zone, of 25 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .

The Momentum Indicator moved above the 0 level on February 14, 2024. You may want to consider a long position or call options on ALK as a result. In of 82 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .

The Moving Average Convergence Divergence (MACD) for ALK just turned positive on January 26, 2024. Looking at past instances where ALK's MACD turned positive, the stock continued to rise in of 50 cases over the following month. The odds of a continued upward trend are .

ALK moved above its 50-day moving average on February 14, 2024 date and that indicates a change from a downward trend to an upward trend.

Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where ALK advanced for three days, in of 289 cases, the price rose further within the following month. The odds of a continued upward trend are .

The Aroon Indicator entered an Uptrend today. In of 231 cases where ALK Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .

Bearish Trend Analysis

The Stochastic Oscillator demonstrated that the ticker has stayed in the overbought zone for 6 days. The longer the ticker stays in the overbought zone, the sooner a price pull-back is expected.

Following a 3-day decline, the stock is projected to fall further. Considering past instances where ALK declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .

ALK broke above its upper Bollinger Band on February 20, 2024. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.

Fundamental Analysis (Ratings)

Fear & Greed

The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating fairly steady price growth. ALK’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.

The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is fair valued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (1.201) is normal, around the industry mean (103.910). P/E Ratio (21.410) is within average values for comparable stocks, (20.011). ALK's Projected Growth (PEG Ratio) (0.000) is slightly lower than the industry average of (0.687). Dividend Yield (0.000) settles around the average of (0.040) among similar stocks. P/S Ratio (0.484) is also within normal values, averaging (0.963).

The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.

The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating that the returns do not compensate for the risks. ALK’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 91, placing this stock worse than average.

Notable companies

The most notable companies in this group are Delta Air Lines (NYSE:DAL), Southwest Airlines Co (NYSE:LUV), United Airlines Holdings (NASDAQ:UAL), American Airlines Group (NASDAQ:AAL), JetBlue Airways Corp (NASDAQ:JBLU).

Industry description

Airlines industry comprises passenger air transportation, including scheduled and non-scheduled routes. This can include charter airlines, as well as regular commuter ones. Discount pricing and the rise of low-cost carriers over recent decades have expanded the industry by making its services accessible to a much larger global population, compared to the older days when airline travel was a relative luxury for many people in the world. Delta Air Lines Inc., Southwest Airlines Co and United Continental Holdings, Inc. are some of the airlines with the largest stock market capitalizations in the U.S.

Market Cap

The average market capitalization across the Airlines Industry is 6.64B. The market cap for tickers in the group ranges from 9.36K to 26.22B. DAL holds the highest valuation in this group at 26.22B. The lowest valued company is KLMR at 9.36K.

High and low price notable news

The average weekly price growth across all stocks in the Airlines Industry was 0%. For the same Industry, the average monthly price growth was 3%, and the average quarterly price growth was -6%. FLYX experienced the highest price growth at 19%, while AIABF experienced the biggest fall at -20%.

Volume

The average weekly volume growth across all stocks in the Airlines Industry was -31%. For the same stocks of the Industry, the average monthly volume growth was -60% and the average quarterly volume growth was 18%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 56
P/E Growth Rating: 64
Price Growth Rating: 49
SMR Rating: 68
Profit Risk Rating: 90
Seasonality Score: -51 (-100 ... +100)
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ALKDaily Signal changed days agoGain/Loss if shorted
 
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A.I.Advisor
published price charts
A.I. Advisor
published General Information

General Information

a holding company, which through its subsidiaries, provides air transportation services

Industry Airlines

Profile
Fundamentals
Details
Industry
Airlines
Address
19300 International Boulevard
Phone
+1 206 392-5040
Employees
25469
Web
https://www.alaskaair.com
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ALK and

Correlation & Price change

A.I.dvisor indicates that over the last year, ALK has been closely correlated with DAL. These tickers have moved in lockstep 68% of the time. This A.I.-generated data suggests there is a high statistical probability that if ALK jumps, then DAL could also see price increases.

1D
1W
1M
1Q
6M
1Y
5Y
Ticker /
NAME
Correlation
To ALK
1D Price
Change %
ALK100%
+0.67%
DAL - ALK
68%
Closely correlated
+0.39%
UAL - ALK
68%
Closely correlated
+1.38%
AAL - ALK
61%
Loosely correlated
+0.54%
LUV - ALK
60%
Loosely correlated
+2.01%
JBLU - ALK
52%
Loosely correlated
-4.28%
More
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