Hold -- Price 18.84 on July 7
by Jesup & Lamont

Alaska Airlines reported that June traffic fell by 2.6%, on 4.1% less capacity -- so that load factor rose by 1.2 points to 80.7% from 79.5%. Load factor was better than the flat-to-down by 1% we were forecasting. [Affiliated] Horizon Air reported that June traffic fell by 9.2% on a capacity decline of 10.8%, so that load factor rose by 1.4 points to 79.4% from 78% last year. We are estimating that pricing as measured in yield declined by 10%, the low end of the range for airlines, as Alaska Air is mostly a domestic airline, although we believe [it] was substantially hurt in May because of its exposure to Mexican routes. To counter the decline in bookings in Mexico, Alaska Airlines moved a significant amount of capacity to Hawaii, where we believe the company also had relatively low yields, as it was introducing new service. We are estimating [second-quarter earnings per share] of 36 cents, versus a profit of $1.74 last year, and below the consensus estimate of 46 cents ... . We're maintaining our Hold rating on ALK common, as we believe the stock is somewhat fairly valued, selling at more than 13 times estimated 2009 EPS of $1.34. Our 2QE-EPS of 36 cents is below the consensus, which has been declining during the quarter. Market cap: $683 million.

10.7

PE of 6 and a PEG of 1.1.

seems that ALK would be a good buyout for a larger carrier given its routes along the west coast. share price is very low with company buy back

Expert's pick

Alaska Air Group recently announced a $100 million dollar buyback.

Alaska Airlines said it plans to test in-flight wireless internet service in one of its planes next spring and, if all goes well, intends to equip all of its planes with the technology. “We'll test a variety of pricing models" during next spring's test of the service, said spokeswoman Amanda Tobin Bielawski of Alaska, a unit of Seattle-based Alaska Air Group Inc.

The stock trades for 4.5x cash flow.

Upgraded by JP Morgan from Neutra to Overweight

Upgraded by JP Morgan from Underweight to Neutral

growth

From Barron's 6-25-07:

Buy - Price 27.41 on June 19
by McAdams Wright Ragen
"We [recently] resumed coverage of ALK with Buy and 35 [target]. With shares having sold off more than 40% from last year's highs, we feel a large portion of recent negative developments are reflected in the airline's stock price. Investors seem uneasy with fundamental turbulence that includes: Moderating demand; ticket-pricing sustainability; competition on West Coast routes; greater fuel-cost exposure; and pilot-contract negotiations.

At the same time, Alaska's cost structure, excluding fuel, has seen improvement. An all-737 mainline fleet by the end of 2008 should reduce fuel and maintenance expenses while providing greater long-term earnings leverage tied to higher-gauge aircraft. Tough quarters may still be in store, [but] these entry points merit consideration...We view the idea as suitable for accounts willing to accommodate higher risk."

airlines suck and oil is too much $$$$$$$$