Alaska Air has revealed a bold plan to boost its profits by $1 billion by 2027, driven by the recent acquisition of Hawaiian Airlines and the growing demand for premium travel. The airline’s shares saw a significant jump, climbing around 12% to $60.81 during afternoon trading following the announcement.
The Seattle-based carrier completed its $1.9 billion deal to acquire Hawaiian Airlines in September. Despite the hefty price tag, Alaska expects no dilution of its profit margins. In fact, it forecasts at least $500 million in savings as a result of the merger. This acquisition, along with the strong rise in demand for high-end travel, is expected to contribute substantially to Alaska’s financial performance over the next few years.
The company also revised its profit predictions for the fourth quarter and the full year, citing a surge in holiday travel bookings and reduced interest costs. In addition to the profit boost, Alaska is expanding its global reach by introducing new non-stop flights from Seattle to Tokyo and Seoul using Hawaiian’s widebody aircraft. By 2030, Alaska aims to serve 12 international destinations from Seattle, potentially generating an extra $1.5 billion in revenue.
CEO Ben Minicucci highlighted the global opportunities that have opened up as a result of the Hawaiian acquisition, noting that the deal gives Alaska access to 1,200 destinations worldwide, allowing it to carry almost 6 million more passengers annually without the need for additional planes. “What could have taken us decades to build is at our fingertips today,” Minicucci said during a discussion with investors. “The Hawaiian acquisition has allowed us to accelerate our future.”
In the domestic market, Alaska plans to expand its services by adding more seats on routes from Seattle, Portland, and San Diego, which are some of the fastest-growing regions on the U.S. West Coast.
The airline is also focusing on boosting its loyalty programme, including the launch of a premium credit card. These moves are expected to increase the number of frequent flyer members by 50%, potentially generating $150 million in additional pre-tax profits by 2027. Loyalty schemes have become a significant revenue source for U.S. airlines, with miles often sold to third-party partners such as credit card companies. As customers make purchases, they earn miles, which in turn generates more revenue for the airlines.