Alaska Air Group, Inc. (NYSE:ALK) was one of the stocks on Jim Cramer’s recent Mad Money game plan. Cramer started his game plan with the company, as he stated:
We’re going to have to go to our game plan. Heavy week coming up, so let’s go through it and go through it with alacrity. On Monday, Alaska Air reports. Usually, don’t flag this one. I see big mergers happening now that the war’s over, and Alaska could be part of the conversation. We know United wants to pursue American. Phil LeBeau told us that. I think JetBlue will be considered a prospect, if not just an outright buy. Hard to justify on the antitrust grounds, but luckily for the airlines, I don’t think that will bother this administration.
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Alaska Air Group, Inc. (NYSE:ALK) provides scheduled passenger and cargo service. The company also runs a regional network for shorter-distance routes. Signia Capital Management stated the following regarding Alaska Air Group, Inc. (NYSE:ALK) in its fourth quarter 2025 investor letter:
Alaska Air Group, Inc. (NYSE:ALK), a $5b market cap company, was a new purchase in Q4. Alaska shares moved from $62 per share to $40 per share from September to December on what we view as a number of one-time factors. On December 3rd, Alaska announced a reduction in Q4 earnings based up on three unique and one time impacts.
First, ALK disclosed the impact of an earlier reported IT and system outage in late October, which led to a temporary ground stop for all Alaska operations. The company estimated that this disruption would cost the company $.25 per share in Q4. Additionally, the U.S. government shutdown in October led to an FAA mandated reduction in flights across the industry as the FAA attempted to manage elevated air traffic controller absences. Lastly, a West coast refinery fire and pipeline disruption drove higher fuel costs in the quarter for ALK. In total, ALK believed the impact to be $.55-.60 in EPS for the quarter. Q4 company guidance was reduced from at least $.40 to approximately $.10 in EPS. We believe that these issues are largely transitory and created a buying opportunity in ALK shares.
Taking a slightly longer-term view, we believe that Alaska Air Group is well-positioned for growth in revenue and earnings due to its acquisition of Hawaiian Airlines. Announced nearly 2 years ago, a lengthy regulatory approval initially delayed this merger, but we believe that ALK is on-track in implementing many of the cost and revenue synergies outlined previously. With less than 3% network overlap the Hawaiian acquisition significantly expands Alaska’s network and provides a strong hub for increased international routes for Alaska. Alaska management has laid out a plan to grow earnings from roughly $5 in EPS in 2025 to greater than $10 in EPS by 2027. Trading at approximately $50, we believe ALK shares present a very favorable risk/reward.
While we acknowledge the risk and potential of ALK as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ALK and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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