Amid volatile fuel prices resulting from the conflict in Europe and the Russia-Ukraine war, Alaska Air Group ALK increased fuel cost estimate for the first quarter of 2022. With expectations of increased fuel costs, the company has reduced its capacity outlook for the year.

Per an investor update dated Mar 8, Alaska Air expects first-quarter economic fuel cost to be $2.60-$2.65 per gallon compared with the previous estimate of $2.45-$2.50. With this, capacity is now expected to decline 3-5% in the first half of 2022 from the 2019 level.

Coronavirus concerns had dented Alaska Air’s operations in 2020 due to a dramatic drop in air-travel demand. In response to the tepid demand scenario, the carrier reduced its capacity significantly. With the availability of vaccines and easing coronavirus-led restrictions, the airline began to recover in 2021. With ramp up in operations, ALK expanded its capacity. It expects to return to pre-pandemic capacity levels by summer 2022. Thereafter in the second half of the year, ALK expects growth. However, the company expects to continue to adjust capacity in response to the fluctuating fuel price environment.

Alaska Air Group, Inc. Price

Alaska Air Group, Inc. price | Alaska Air Group, Inc. Quote

Zacks Rank & Key Picks

Alaska Air carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks within the broader Transportation sector are as follows:

Trinity Industries TRN sports a Zacks Rank #1 (Strong Buy). The company has an impressive earnings surprise history, having outperformed the Zacks Consensus Estimate in three of the preceding four quarters (missing in one), the average beat being 60.8%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Trinity have gained more than 10% in the past six months.

USA Truck USAK carries a Zacks Rank #1. The company’s earnings have surpassed the Zacks Consensus Estimate in three of the preceding four quarters (in line in one), the average beat being 64.4%.

Shares of USA Truck have rallied more than 60% in the past six months.

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