Alaska Airlines (Alaska) has unveiled an ambitious plan to achieve an additional US$1 billion in profits by 2027, leveraging its acquisition of Hawaiian Airlines and rising demand for premium travel. The announcement, made on Tuesday, December 10, caused a surge in the carrier's share price, climbing 12% to US$60.81.
Based in Seattle, Washington, Alaska Airlines acquired Hawaiian Airlines for US$1.9 billion in September. This deal is expected to bolster the company's financial performance without impacting profit margins, offering US$500 million in savings. As part of its growth strategy, Alaska is set to increase the share of premium seating on its flights from 26% to 29% by 2027, aiming to generate an extra US$100 million in profits. The airline noted that customers are increasingly willing to pay higher prices for spacious and comfortable seats, particularly on long-haul flights, boosting high-margin revenue growth.
“Premium is the profit differentiator,” stated Andrew Harrison, the Chief Commercial Officer, highlighting the significance of premium services in the airline's profitability.
The company is also introducing a premium credit card as part of an overhaul of its loyalty programme. This initiative is expected to grow its frequent flyer base by 50% and add US$150 million in incremental pre-tax profits by 2027. Alaska anticipates earning at least US$10 per share by 2027, more than doubling its projected US$4.25 to US$4.50 per share earnings for 2024. Additionally, it foresees a pre-tax margin of 11% to 13%.
The carrier aims to expand its international footprint with new non-stop flights from Seattle to Tokyo and Seoul in 2025, utilising Hawaiian Airlines' wide-body aircraft. By 2030, the airline plans to serve 12 international destinations from Seattle, generating US$1.5 billion in revenue. The Hawaiian Airlines acquisition has significantly increased Alaska's access to 1,200 global destinations, enabling the airline to carry nearly 6 million passengers annually without increasing capacity.
Domestically, airline plans to enhance seating availability in key West Coast markets, including Seattle, Portland and San Diego, which are among the nation's fastest-growing travel hubs.
CEO Ben Minicucci emphasised the transformative impact of the Hawaiian Airlines deal, stating, “What could have taken us decades to build is at our fingertips today. The Hawaiian acquisition has allowed us to accelerate our future.”
