SEATTLE - Alaska Air (NYSE:ALK) Group, Inc. has initiated a private offering of senior secured notes due in 2029 and 2031, facilitated by AS Mileage Plan IP Ltd., a wholly-owned subsidiary of the company. The notes are guaranteed by Alaska Airlines, Inc. and AS Mileage Plan Holdings Ltd., and secured by assets from Alaska's Mileage Plan loyalty program.
The proceeds from the offering, along with a loyalty term loan, will fund reserve and collection accounts for the notes and loan facility. These funds will be used for an intercompany loan to Alaska Airlines. The loan will enable Alaska Airlines to redeem outstanding debt from its merger with Hawaiian Airlines, including Hawaiian's senior secured notes due in 2029 and 2026, and bolster its liquidity for general corporate purposes.
This offering targets "qualified institutional buyers" and relies on exemptions from registration under the Securities Act of 1933. The notes will not be registered under the Securities Act or state securities laws and cannot be sold in the U.S. without registration or an applicable exemption.
The company cautions that this press release includes forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially. Factors influencing these forward-looking statements include competition, labor costs, general economic conditions, operating costs, and regulatory changes, among others.
Alaska Air Group, headquartered in Seattle, encompasses Alaska Airlines, Hawaiian Holdings (NASDAQ:HA), Horizon Air, and McGee Air Services, serving over 140 destinations. The company emphasizes safety, customer care, operational excellence, and sustainability. Alaska Airlines, a member of the oneworld Alliance, offers extensive travel options through its global partners.
This article is based on a press release statement from Alaska Air Group, Inc.
In other recent news, Alaska Air Group has launched a $1.5 billion financing initiative backed by its customer loyalty program. The funds from this financing are intended to support a reserve account and a collection account for the financing, as well as to redeem certain debts from its merger with Hawaiian Airlines and for general corporate purposes. In addition to this, TD (TSX:TD) Cowen has maintained a Buy rating on Alaska Air's stock and increased the price target to $52.00, following the company's updated third-quarter 2024 financial guidance which anticipates earnings per share (EPS) between $2.15 and $2.25. Furthermore, Alaska Air Group reported strong second-quarter results, with a GAAP net income of $220 million and an adjusted net income of $327 million.
In other developments, Alaska Air Group has finalized the acquisition of Hawaiian Airlines, a $1.9 billion deal that is expected to enhance competition and benefit consumers by expanding access to both airlines' networks. The combined entity of Alaska Air and Hawaiian Airlines will continue to operate independently until a single operating certificate from the Federal Aviation Administration (FAA) is secured. This will allow the airlines to function as a single carrier, offering nearly 1,500 daily flights with a fleet of 350 aircraft and employing over 33,000 individuals.
In terms of leadership, Alaska Airlines has announced new appointments within its cargo division, naming Ian Morgan as Vice President of Cargo and Jason Berry as Executive Vice President of Alaska Air Group. These changes aim to bolster the company's cargo operations, particularly after the merger with Hawaiian Airlines. These are the recent developments in the company.
InvestingPro Insights
As Alaska Air Group (ALK) embarks on this strategic financial move, InvestingPro data offers additional context to the company's current position. ALK's market capitalization stands at $5.68 billion, reflecting its significant presence in the airline industry. The company's revenue for the last twelve months as of Q2 2024 reached $10.52 billion, with a modest growth of 1.74% over the same period.
InvestingPro Tips highlight that ALK's net income is expected to grow this year, which aligns with the company's efforts to optimize its financial structure through the new note offering. This positive outlook is further supported by the fact that 8 analysts have revised their earnings upwards for the upcoming period, suggesting confidence in ALK's financial strategy.
The company's P/E ratio (adjusted) of 11.84 for the last twelve months as of Q2 2024 indicates a relatively attractive valuation, especially considering the expected earnings growth. This is reinforced by an InvestingPro Tip noting that ALK is trading at a low P/E ratio relative to its near-term earnings growth potential.
While ALK has shown strong performance with a 24.62% price return over the last month and is trading near its 52-week high, investors should note that the stock's price movements are quite volatile. This volatility could be influenced by factors such as the ongoing merger with Hawaiian Airlines and the broader economic conditions affecting the airline industry.
For readers interested in a more comprehensive analysis, InvestingPro offers 12 additional tips for Alaska Air Group, providing a deeper insight into the company's financial health and market position.
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