SEATTLE – Alaska Airlines has made a strategic investment in Jet Zero, a pioneer in developing an innovative mixed-wing aircraft that is expected to reduce fuel consumption by up to 50 percent. The investment, which also includes options for future aircraft orders, was announced today as part of the airline’s broader commitment to sustainability and its goal of achieving net-zero carbon emissions by 2040.
The partnership with JetZero aligns with Alaska Airlines’ sustainability strategy, which includes operational efficiency, fleet renewal, sustainable aviation fuels, waste reduction, and exploration of electric aircraft. The airline’s investment arm, Alaska Star Ventures, is actively pursuing technologies that can help achieve these environmental goals.
The JetZero BWB design integrates the wings and fuselage into a single aerodynamic shape to dramatically reduce drag. This innovative design not only promises significant fuel savings, but also aims to reduce carbon emissions and operating costs. Furthermore, the unique airframe is expected to enhance passenger comfort by offering a quieter and more enjoyable flying experience.
Tom O’Leary, CEO and co-founder of JetZero, emphasized the importance of the BWB design in addressing the aviation industry’s challenge of reducing fuel consumption and emissions. He emphasized the immediate benefits of cost savings, significantly reduced emissions, and improved customer experience that JetZero’s aircraft will provide compared to current aircraft.
JetZero’s collaboration with the U.S. Air Force, NASA and the FAA has been crucial in pushing BWB toward commercial viability. The company, co-founded by aviation veteran Mark Page, aims to have the world’s first commercial BWB aircraft in service by 2030, marking a significant step toward the aviation industry’s net-zero goals by 2050.
Known for its award-winning customer service and industry-leading Mileage Plan loyalty program, Alaska Airlines is the first airline to invest in JetZero’s Series A funding. Together with its regional partners and global alliances, the airline serves more than 120 destinations, providing a superior flying experience for its guests.
The investment in JetZero’s BWB technology is based on a press release and reflects Alaska Airlines’ ongoing efforts to impact the future of aviation and its commitment to environmental responsibility.
In other recent news, Alaska Airlines The airline group (NYSE:) reported strong second-quarter results with GAAP net income of $220 million and adjusted net income of $327 million. The company generated record revenue of $2.9 billion, largely driven by nearly $1 billion in its luxury segment. Alaska Airlines leads the industry with a 15.8% adjusted pre-tax profit margin. The company is currently working on upgrading its premium seats, with the move expected to be completed by mid-2026.
Additionally, Alaska Airlines announced an extension of the Justice Department’s review period of its proposed merger with Hawaiian Holdings (NASDAQ:) Inc. The merger, if approved, would strengthen its position in air transportation, particularly in the Pacific region. While TD Cowen maintained a buy rating on Alaska Air shares, it lowered its price target to reflect the company’s latest guidance and outlook for the second half of 2024.
Despite the increase in summer travel, airlines, including Alaska Air, face challenges due to oversupply of seats and increased operating expenses. However, Alaska Air has shown strong financial performance and is taking strategic steps to maintain its leading position in the domestic aviation market. These recent developments are part of ongoing trends in the aviation industry.
InvestingPro Insights
Alaska Airlines’ recent strategic investment in JetZero blended-wing (BWB) aircraft not only underscores its commitment to sustainability, but also aligns with the company’s financial strategy. According to InvestingPro, Alaska Airlines (ALK) is expected to see net income growth this year. This is a critical metric for investors as it signals potential profitability and financial health in the context of the airline’s ambitious environmental goals.
Furthermore, despite some analysts revising their earnings forecasts down, Alaska Airlines is trading at a low price-to-earnings ratio relative to its near-term earnings growth, with an adjusted price-to-earnings ratio of 9.1. This could indicate that the stock is undervalued, providing an attractive entry point for investors who are optimistic about the company’s future, especially given its recent sustainability initiatives. Furthermore, with a price-to-book ratio of 1.03, the company’s market valuation is closely aligned with its book value, which could provide a margin of safety for investors.
It’s worth noting that Alaska Airlines operates with a moderate level of debt, which can be a double-edged sword. On the one hand, it allows the company to invest in growth opportunities like the JetZero partnership; on the other hand, it requires prudent financial management to ensure long-term sustainability. For those interested in further analysis, InvestingPro offers additional insights, including 9 more InvestingPro tips for Alaska Airlines, which can be found at https://www.investing.com/pro/ALK.
As Alaska Airlines continues to navigate the volatile airline industry, these financial metrics and InvestingPro tips provide an overview of the company’s current situation and future potential, especially as it embarks on initiatives that could redefine aviation and its environmental impact.
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