Alaska Air Overcomes January Midair Incident as Travel Demand Surges

Shares of Alaska Air Group (ALK) took off in intraday trading Thursday after the airline posted better-than-expected results and guidance as travel demand boomed, helping to offset the effects of a January flight emergency.

The carrier reported a first-quarter adjusted loss of $116 million, or $0.92 per share, with revenue rising 1.6% to $2.23 billion. Both beat estimates.

Alaska Air’s results were impacted by a midair incident on Jan. 5 in which a door plug on a Boeing (BA) 737 Max 9 jet blew out, leading to a temporary grounding of some of the airline’s planes. Earlier this month, Alaska Air announced that Boeing had paid $160 million in compensation during the first quarter for lost revenue from the Flight 1282 incident, and in this report noted the total was actually $162 million. The carrier has indicated it expects further payments from Boeing in the future.

Alaska Air explained that its unit revenue rose 3.8%, exceeding its forecasts, “driven by better-than-expected performance from our Q1 network reconfiguration, strong return of West Coast corporate travel, and robust close-in leisure demand.” It pointed out that unit revenue would have been up 5% had it not been for the losses caused by the Flight 1282 event.

Chief Executive Officer (CEO) Ben Minicucci said that “despite significant challenges to start the year our results have far exceeded initial expectations.”

The airline noted it sees current quarter earnings per share (EPS) in the range of $2.20 to $2.40, above analysts’ forecasts.

Alaska Air Group shares climbed 7% as of 11:15 a.m. ET Thursday to $45.70, their highest level since August.