ALK · Alaska Air Group
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $46.36
Note written ·
Price against the kill line
17.0% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $46.36, on record since 11 November 2026. The shares are down 12.6% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $46.36, which would put the shares back at their April 2026 rally high area and show them leading the S&P 500. A fourth-quarter adjusted loss narrower than the $2.00 per share low end of the guide would also show the shares leading.
Research onlyNot in the portfolio.
Last catalyst
Key figures from the filings · Industrials
Quarter to 30 September 2026, filed 6 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 4,308
- Revenue, change on a year (%)
- +14.4
- Operating margin (%)
- 1.9
- Free cash flow, four quarters ($M)
- 675
- Net cash, cash less debt ($M)
- −3,745
- Enterprise value to sales (×)
- 0.5
- Free-cash-flow yield (%)
- 15.6
All filed numbers
What Alaska Air Group reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Operating margin (%) |
|---|---|---|---|
| first filed | 4,308 | +14.4 | 1.9 |
| first filed | 4,065 | +9.7 | −4.1 |
| first filed | 3,300 | +5.2 | −8.5 |
| first filed | 3,632 | +2.8 | 2.1 |
| first filed | 3,766 | +22.6 | 3.9 |
| first filed | 3,704 | +27.9 | 7.5 |
| Pre-tax income ($M) | 18.0 |
| Net income ($M) four quarters: −395 | −147 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | −5.0 |
| Operating cash flow ($M) | 940 |
| Capital spending ($M) | 265 |
| Free cash flow ($M) | 675 |
| Cash and short-term investments ($M) | 2,231 |
| Debt ($M) long-term debt | 5,976 |
| Net cash, cash less debt ($M) | −3,745 |
| Deferred revenue ($M) | Not reported |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 656 |
| Inventory ($M) | 249 |
| Shareholders' equity ($M) | 3,530 |
| Market value ($M) | 4,340 |
| Enterprise value, market value plus net debt ($M) | 8,085 |
| Enterprise value to sales (×) | 0.5 |
| Enterprise value to operating income (×) | Not meaningful |
| Price to earnings (×) | Not meaningful |
| Price to book value (×) | 1.2 |
| Free-cash-flow yield (%) | 15.6 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 11.0% of shares outstanding sold short, 4.0 days of average trading to cover, +2.8% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $1.0M | $0 |
| 12 monthsfrom | $1.0M | $3.5M |
The thesis
Alaska Air Group's shares are more likely to lag the S&P 500 over the next three months. Ticket demand is strong, but a fuel bill has erased 2026 earnings, and the fourth-quarter report settles whether the guided loss holds. The company guided a fourth-quarter adjusted loss of $2.00 to $2.50 per share on economic fuel of $4.65 to $4.85 a gallon (company release, 20 October 2026).
The shares closed at $41.03 on 11 November 2026, up from the 52-week closing low of $33.54 on 21 October 2026 and from $38.94 on 6 November 2026 (adjusted daily closes). Chief Executive Ben Minicucci said on 30 October 2026 that the group could lose up to $700 million in 2026 if current conditions persist, as about 200 management jobs were cut (Reuters, via press reports). Management on the 21 October 2026 earnings call pointed to at least $3 to $4 per share of core earnings improvement in 2027, excluding fuel.
The market has priced in the guidance reset. The shares closed at $41.03 against TD Cowen's $41 target (29 October 2026) and UBS's $48 target (2 November 2026), and the 3-month price change is −13.6%. What the price does not yet reflect is jet fuel relief: guided fourth-quarter fuel is above the $4 a gallon level President Shane Tackett said on 29 September 2026 would make 2027 free cash flow hard.
Bullish and bearish views on Alaska Air Group, Inc.
The bull case on Alaska Air Group, Inc. (ALK), in brief: demand is running hot. The bear case: fourth-quarter fuel is far above plan.
Bull case
- Demand is running hot. Third-quarter revenue rose 14% to $4.3 billion and unit revenue rose 11.7% on 2.4% more capacity (company release, 20 October 2026). Fourth-quarter unit revenue is guided up low double digits.
- Overhead is being cut. About 200 non-contract roles are eliminated, including 125 in Washington and 48 in Hawaii, with the last working day on 13 November 2026 (Reuters and local press, 30 October 2026). Minicucci said administrative costs have grown faster than revenue; the company has not quantified the savings.
- Management points to 2027 improvement. The 21 October 2026 call cited at least $3 to $4 per share of core earnings improvement, slower industry capacity growth and 22 737-10 deliveries starting late in the first quarter of 2027. Tackett told Reuters on 29 September 2026 that earnings per share could reach $10.00 in 2027 or later, depending on fuel and the economy.
- Analysts keep Buy ratings. UBS kept Buy and lowered its target to $48 from $51 on 2 November 2026. TD Cowen kept Buy and lowered its target to $41 from $44 on 29 October 2026.
- Airline shares rebounded together. A news headline dated 9 November 2026 reported airline companies trading higher, and Alaska closed at $41.70 that day against $38.94 on 6 November 2026 (adjusted daily closes).
Bear case
- Fourth-quarter fuel is far above plan. Guided economic fuel of $4.65 to $4.85 a gallon compares with $3.94 in the third quarter and $2.51 a year earlier. The company puts the added cost at about $650 million in the fourth quarter and about $1.8 billion for the year versus its original plan (company release, 20 October 2026).
- The loss guide is deep. The fourth-quarter adjusted loss of $2.00 to $2.50 per share compares with a $0.98 loss estimate before the report (news headlines, 20 October 2026). The full-year adjusted loss is guided at $5.00 to $5.50 per share.
- Cost cuts are small next to fuel. The cuts are under 1% of roughly 32,500 employees (company spokesperson, 30 October 2026), and no capacity reductions were reported.
- The balance sheet is stretched. Adjusted net debt to EBITDAR (earnings before interest, taxes, depreciation, amortization and rent) was 5.5 times at 30 September 2026, against 2.9 times a year earlier. Total liquidity was $3.3 billion, including $2.231 billion of unrestricted cash and securities (company release, 20 October 2026).
- Targets are coming down. UBS cut from $51 to $48 and TD Cowen from $44 to $41 within two weeks of the 20 October 2026 report. DA Davidson also adjusted its target on 4 November 2026.
Price setup
The shares closed at $41.03 on 11 November 2026 (adjusted daily closes). That is 32.3% below the 52-week intraday high of $60.63 set on 9 February 2026 and 22.3% above the 52-week closing low of $33.54 on 21 October 2026.
The 50-day average is $38.76 and the 200-day average is $43.62, both as of 11 November 2026. The shares have moved above the 50-day average and remain below the 200-day average. Closes of $38.70 on 5 November 2026 and $41.70 on 9 November 2026 show a gap of about three dollars in two sessions, so the level is volatile.
Insider filings show routine activity. Form 4 filings dated 4 November 2026 from four officers report option exercises with shares withheld to cover tax, at prices of $36.78 to $38.29, and no open-market sales. The company filed its 10-Q on 6 November 2026.
Catalysts ahead
- ~January 2027 (est.): Fourth-quarter 2026 results. Tests the guided $2.00 to $2.50 adjusted loss per share and whether management gives a 2027 earnings framework.
- ~March 2027 (est.): First 737-10 deliveries, expected late in the first quarter of 2027. Management expects 22 aircraft in 2027; delivery timing affects capacity and cost plans.
Elapsed catalysts
- 13 November 2026: Last working day for the roughly 200 laid-off management employees. Starts the overhead savings, which the company has not yet quantified. (passed)
What would change the view
A daily close above $46.36, which would put the shares back at their April 2026 rally high area and show them leading the S&P 500. A fourth-quarter adjusted loss narrower than the $2.00 per share low end of the guide would also show the shares leading.
What it trades with
Alaska has no refinery, so the jet fuel crack spread over Brent crude passes straight through its income statement. Moves in oil move the shares with other US airlines. A Reuters report of 24 June 2026 said US airline stocks rose as crude fell to its lowest since before the Iran war, and a press report in April 2026 had Alaska up 12.9% to $46.49 on falling oil.
Hawaiian Airlines is part of the group, and management says Hawaii remains a drag of about two points on system unit revenue. The mainline fleet is all Boeing 737, so Boeing delivery and airworthiness news affects both operations and sentiment.
The evidence, claim by claim (8)
- Q3 2026 revenue rose 14% to $4.3B; unit revenue rose 11.7%; economic fuel was $3.94 per gallon versus $2.51 a year earlier. Alaska Air Group Q3 2026 release · as of
- Q4 2026 guidance: adjusted EPS of $(2.50) to $(2.00), economic fuel $4.65 to $4.85 per gallon, unit revenue up low double digits; full-year adjusted EPS $(5.50) to $(5.00). Alaska Air Group Q3 2026 release · as of
- Adjusted net debt to EBITDAR was 5.5x versus 2.9x a year earlier; total liquidity $3.3B, including $2.231B unrestricted cash and securities. Alaska Air Group Q3 2026 release · as of
- Alaska cut about 200 non-contract management jobs (125 in Washington, 48 in Hawaii), under 1% of about 32,500 employees; CEO Ben Minicucci warned of a loss of up to $700M in 2026 if conditions persist. Reuters via local press (Star-Advertiser, ADN) · as of
- UBS kept Buy and lowered its price target to $48 from $51. UBS note, news headline · as of
- TD Cowen kept Buy and lowered its price target to $41 from $44. TD Cowen note, news headline · as of
- Management expects at least $3 to $4 per share of core earnings improvement in 2027, excluding fuel, and 22 737-10 deliveries beginning late Q1 2027. Q3 2026 earnings call · as of
- Four Alaska officers reported option exercises with shares withheld for tax at $36.78 to $38.29; no open-market sales were reported. SEC Form 4 filings · as of
Sources
- Alaska Air Group Cuts About 200 Management Jobs and Warns It Could Lose $700 Million in 2026 · aerocorner.com ·
- Alaska Air lays off 200 workers as fuel costs continue to climb · staradvertiser.com ·
- Alaska Air Group lays off 200 people amid high jet fuel prices · adn.com ·
- BNN Bloomberg ·
Related · shared themes
ALGT
Allegiant Travel
Allegiant Travel Company is modestly more likely to beat the S&P 500 over three months as fares outrun fuel; its 7 December 2026 investor…
DIS
Walt Disney
The Walt Disney Company's shares look more likely to trail the S&P 500 than lead it, because a 14.2% three-month gain already prices in…
CCL
Carnival
Carnival's record 2027 bookings, investment-grade balance sheet and a retreat in crude oil make the shares modestly more likely to beat the…
VAC
Marriott Vacations Worldwide
Marriott Vacations Worldwide is modestly more likely to beat the S&P 500 over three months: third-quarter contract sales rose 29% and 2026…