I started investing in Alaska Air Group $ALK in March 2020 and I'm already 40% up on the investment. But most of the gains happened from April to June. It is time to have another look at this stock.
With this pandemic and recession, the airline industry was hit but sooner or later, they are going to recover and as a good investor, you need to buy low and sell high. Buy when everybody is selling.
Why did I choose Alaska Airlines over the other airlines?
As soon as the pandemic started, the CEO Brad Tilden cut his salary to zero. If you invest in a company, you're looking for great management. Recently, Alaska Airlines acquired Virgin America and instead of buying back shares like other airlines, they saved for a rainy day. Today, we have a storm. Besides, Alaska Airlines have mostly domestic businesses and when the recovery happens, they will recover faster than the competitors.
Although traveling by planes right now is not that risky, Alaska Air Group is keeping the middle seat blocked till January, something that only Delta Airlines $DAL is doing among the big airlines. This is important for consumer confidence. This is one of the reasons why Alaska Airlines have been named the best airline in America for several years in a row.
Alaska Airlines got help from the US government to pay for the salaries of their employees. They got $1.5 billion loan as part of the CARES Act but they have used only $135 million so far. This is something that I really like. Airlines such as American Airlines $AAL and United Airlines $UAL laid off thousands of people and are still asking for more money.
The cashburn is $4 million a day. They can survive the next four years at this rate with the liquidity they have. of course, they are improving it.
Alaska Airlines stock is not as cheap as it used to be in March but it is still a good investment for the long-term.
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