Alaska Airlines plans new nonstop flights to Japan, Korea in $1 billion postmerger profit push

Alaska Air Group expects $1 billion in earnings growth through 2027, and plans to ride the wave of luxury travel demand to get there.

Alaska completed its $1.9 billion acquisition of Hawaiian Airlines in September, less than a year after closing the deal that gives it access to trans-Pacific routes and widebody aircraft such as the Boeing 787 Dreamliner. The two brands operate separately.

The airline will launch nonstop service between its home port of Seattle-Tacoma International Airport and Tokyo's Narita International Airport in May with Hawaii's Airbus A330-200s, and in October between Seattle and South Korea's Seoul Incheon International Airport, Alaska said Tuesday . Tickets for the new flights to Tokyo go on sale on Tuesday, while fares for the latter route go on sale in early 2025.

By 2030, Alaska plans to serve at least a dozen international destinations with widebody aircraft from Seattle.

Alaska expects pre-tax margins between 11% and 13% in 2027 and earnings per share of more than $10. In October, the company estimated 2024 earnings at between $3.50 and $4.50 per share, including Hawaiian's results.

The carrier is also launching a new “premium” credit card together with its partner Bank of Americathe latest co-brand deal designed to generate revenue from customers even when they don't fly.

Alaska is evaluating its premium seat offering across the fleet. Chief Financial Officer Shane Tackett told CNBC that the airline is looking to upgrade options specifically on Hawaii's Airbus A330s, with more customers willing to pay for more space and comfort while traveling.

“If you look at the last two or three years, most of the sales growth has been in those demand areas and I think that's likely to continue,” Tackett said. “We have a very good base product for the main cabin… but more and more people want the opportunity to get into premium economy or first class and we need to meet that demand.”

More seats than ever in first class and premium economy are being purchased directly by customers rather than being filled with free upgrades, Tackett said.

Seattle's rival Delta Airlineswhose 24% market share for domestic passengers is second only to Alaska's 55% in Seattle, has also noted that demand for first-class seats has shifted. However, Delta has a higher share of international passengers from the airport.

Alaska said it plans to offer a new lounge at San Diego International Airport. On Wednesday, Delta said it is opening its Delta One Lounge in Boston, its third after opening locations in New York and Los Angeles this year specifically for customers traveling in the highest cabin.

Meanwhile, Tackett told CNBC he expects more shifts in Boeing's Alaska deliveries.

A door plug blew off one of Alaska's nearly new Boeing 737 Max 9s in January after it left the manufacturer's factory without the key bolts installed. The near-catastrophe and tightened quality controls have disrupted Boeing's production and deliveries to airline customers such as Alaska, United And Southwest.

“I think they're making progress. It's not going to happen in a week. It's going to take time,” Tackett said of Boeing, whose new CEO Kelly Ortberg is tasked with stabilizing the plane maker. “We're in a position where we have to be very focused on helping them understand that quality is the most important thing; it's much more important to us than a rating.”

Boeing is expected to release aircraft orders and deliveries for November at 11 a.m. Tuesday, a figure expected to be affected by a nearly two-month machinists' strike that has halted production of most of Boeing's planes.