Alaska Air Gets Quarterback, Ratings Upgrade and New Delta Intrusions
SEATTLE(TheStreet) - Alaska Airlines
Nevertheless, Alaska shares have been declining in the two-and-a-half weeks since a leading airline analyst cut his rating to sell from hold, based on the mounting competition with the world's third-largest carrier. Shares gained $2.93 on Friday to close at $73.50, apparently due to speculation that Delta or someone else might seek to acquire Alaska.
For the present, Delta is on the offensive in Seattle, and Alaska -- which said regularly that it wants to remain independent -- is battling back. Delta on Tuesday announced new Seattle destinations that include Juneau, which will become its third destination in Alaska, complimenting Anchorage and Fairbanks. Alaska responded quickly, adding service in Salt Lake City.
Alaska also said last week that it has signed a deal with Russell Wilson, the Seattle Seahawks quarterback. who will take part in marketing activities, appear at events and work with the carrier to support youth and education programs. The airline termed Wilson's job CFO, or chief football officer.
The Wilson deal shows just how tough it is to compete with Delta. Wilson plays for a team that signed a deal in September to make Delta its official sponsor, to rename the club seating level the Delta Sky360Club and to provide various Delta signs and branding throughout CenturyLink Field.
The field, incidentally, is named for the third-largest U.S. telecommunications company, which is based in Monroe, La., which was Delta's headquarters from 1925 to 1941.
In the best news of the week for Alaska, S&P raised the carrier's credit rating to BB-plus from BB on Tuesday. The rating service said it assesses Alaska's business risk profile as fair and its financial risk profile as minimal.
The upgrade reflects "our expectation of continued strong operating performance, due to the industry's generally favorable revenue environment and relatively stable fuel prices, and with continued debt reduction," said credit analyst Betsy Snyder in a prepared statement.
Snyder wrote that Alaska "faces significant competition in its West Coast markets, principally from Southwest
Snyder said she anticipates that Alaska revenue will grow around 4% in 2014 and 3% in 2015 "based on increased traffic, but with lower pricing due to added competition." The carrier, she noted, dedicates about 33% of its capacity to West Coast markets; 15% to Alaska and Alaska-mainland markets; 22% to midcontinent and transcontinental markets; 20% to and from Hawaii; and 10% to Mexico and Canada.