SEATTLE – Alaska Airlines has made a strategic investment in JetZero, a company leading the development of an innovative blended wing-body (BWB) aircraft designed to reduce fuel burn by up to 50%. 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 to achieve net-zero carbon emissions by 2040.
The partnership with JetZero is in line with Alaska Airlines’ sustainability strategy, which includes operational efficiency, fleet renewal, sustainable aviation fuels, waste reduction and research into electrified aircraft. The airline’s investment arm, Alaska Star Ventures, is actively seeking technologies that can help achieve these environmental goals.
JetZero’s BWB aircraft design integrates the wing and fuselage into a single aerodynamic shape to significantly reduce drag. This innovative design not only promises significant fuel savings, but also aims to lower CO2 emissions and operating costs. In addition, the unique aircraft structure is intended to increase passenger comfort by providing a quieter and more pleasant flight 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 burn and emissions. He highlighted the immediate benefits of cost savings, dramatically reduced emissions and an improved customer experience that JetZero’s aircraft will provide compared to current aircraft.
JetZero’s collaboration with the United States Air Force, NASA and the FAA was critical in making the BWB aircraft commercially viable. Co-founded by aerospace veteran Mark Page, the company aims to have the world’s first commercial BWB aircraft in service by 2030, marking a major step toward the aviation industry’s 2050 net-zero goals.
Alaska Airlines, known for its award-winning customer service and industry-leading Mileage Plan loyalty program, is the first airline to invest in JetZero’s Series A funding round. The airline, together with its regional partners and global alliances, serves over 120 destinations and offers its guests a first-class flight experience.
According to a press release, the investment in JetZero’s BWB technology reflects Alaska Airlines’ ongoing efforts to impact the future of aviation and its commitment to environmental responsibility.
More current news: Alaska Airlines (NYSE:) Group Inc. reported a strong second quarter with GAAP net income of $220 million and adjusted net income of $327 million. The company posted record revenue of $2.9 billion, boosted by nearly $1 billion from the premium segment. Alaska Air is also an industry leader with an adjusted pretax margin of 15.8%. The company is currently improving premium seating on aircraft, a measure that is expected to be completed by mid-2026.
In addition, Alaska Air announced an extension of the U.S. Department of Justice (DOJ) review period for the planned merger with Hawaiian investments (NASDAQ:) Inc. The merger, if approved, would result in a strengthening position in the air transportation sector, particularly in the Pacific Rim. While TD Cowen maintained its buy rating on Alaska Air shares, it lowered the price target to reflect the company’s recent forecasts and insights for the second half of 2024.
Despite a surge in summer travel, airlines like Alaska Air are facing challenges due to an oversupply of seats and increased operating costs. However, Alaska Air has shown strong financial performance and is taking strategic steps to maintain its leading position in the domestic airline market. These recent developments are part of ongoing trends in the airline industry.
InvestingPro Insights
Alaska Airlines’ recent strategic investment in JetZero’s blended wing-body (BWB) aircraft not only underscores the company’s commitment to sustainability, but is also in line with the company’s financial strategy. According to InvestingPro, Alaska Airlines (ALK) is expected to deliver net income growth this year. This is an important metric for investors as it indicates potential profitability and financial health in the context of the airline’s ambitious environmental goals.
Although some analysts have revised their earnings expectations downward, Alaska Airlines trades at a low price-to-earnings (P/E) ratio relative to its near-term earnings growth, with an adjusted P/E of 9.1. This could suggest that the stock is undervalued and represents an attractive entry point for investors optimistic about the company’s future, especially given its recent sustainability initiatives. In addition, the company’s market valuation is closely aligned with its book value, with a price-to-book ratio of 1.03, potentially offering investors a margin of safety.
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 picks provide an overview of the company’s current status and future potential, especially as the company launches initiatives that could redefine aviation and its impact on the environment.
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