Yahoo Finance Alaska Air Group’s New Growth Initiatives for 2016
Alaska Air Group's 4Q15 Revenues Climbed, Beating Estimates
New premium economy product
Alaska Air Group (ALK) plans to launch a premium economy class, which is expected to add about $5 million to its profits in 2016, $50 million in 2017, and $85 million in 2018. Starting in the second half of 2016, ALK plans to retrofit its existing aircraft. It expects to complete 75 aircraft by the end of 2016.
Increasing fuel efficiency
Alaska Air Group has one of the most fuel-efficient fleets in the industry. Its 2015 fuel efficiency improvement is higher than the last ten years’ cumulative fuel efficiency improvement. The airline expects this trend to continue in 2016.
To accomplish this, ALK plans to take delivery of 19 new 737-900ERs in 2016. It plans to retire 13 older, less-efficient, and more maintenance-intensive 737-400s, as well as adding longer stages in its regional routes.
Route expansion
Alaska Air Group added 20 new markets in 2015, the highest ever in any year. For 2016, it plans to grow these markets, add new routes to help growth, and maintain market share in the face of intensifying competition.
Alliances
Partnerships have helped Alaska Air Group increase demand and provide its passengers with improved global customer reach. ALK plans to continue down this path, especially in the international markets.
Other initiatives
Alaska Air Group expects to add $60 million in revenues in 2016 by promoting its mileage plan and credit card. This should reduce its cost structure and improve its fare advantages.
The PowerShares Dynamic Leisure & Entertainment Portfolio ETF (PEJ) invests 2.7% of its holdings in Alaska Air Group (ALK). It also invests 5% of its holdings in each of Delta Air Lines (DAL) and United Continental Holdings (UAL), 2.5% of its holdings in Allegiant Travel Company (ALGT), and 2.4% of its holdings in JetBlue Airways (JBLU).
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