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Alaska Air Group (ALK): Assessing Valuation After Major Iceland Route and European Expansion with Icelandair

Simply Wall St · 09/10 12:15
Alaska Air Group (ALK) just made headlines with its latest international push: the company’s flagship airline is set to launch nonstop flights from Seattle to Reykjavík, Iceland, starting May 2026. Even more intriguing, Alaska Airlines is joining forces with Icelandair, enabling travelers to reach a host of European destinations on a single ticket. For investors weighing their next move, this combination of new route and strategic partnership signals a bolder play in the transatlantic market. Taking a step back, Alaska Air Group has spent the past year steadily broadening its reach. Alongside this new Iceland route, the company has enhanced its loyalty program, expanded lounge privileges, and deepened its collaborations within the oneworld alliance. These moves arrive as the stock has surged 57% over the past year, outpacing longer-term performance and hinting that momentum may be shifting for ALK. Growth in both annual revenue and net income adds to the story, helping to support this recent run. But after such a strong rebound, is Alaska Air Group now trading at a discount to its true value, or is all that future growth already factored into the price?

Most Popular Narrative: 6% Undervalued

The prevailing narrative suggests that Alaska Air Group is undervalued by approximately 6%, reflecting confidence in the company’s strategic shifts and future earnings growth.

The successful integration of Hawaiian Airlines and realization of synergy initiatives, particularly in network connectivity and premium offerings, are unlocking incremental profit, enhancing operational efficiency, and supporting margin expansion for the next several years.

Want to know what’s fueling this undervalued call? The narrative is built on bold growth forecasts, significant profit assumptions, and a notably low future multiple. Curious what margin improvement and buybacks underpin the fair value? The quantitative details behind this target might surprise you.

Result: Fair Value of $66.29 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising operating costs and ongoing integration risks with Hawaiian Airlines could present challenges to Alaska Air Group’s growth outlook and may affect future profitability.

Find out about the key risks to this Alaska Air Group narrative.

Another View: Price Ratios Tell a Different Story

While many see Alaska Air Group as undervalued, another lens suggests a higher valuation than industry averages based on current price ratios. Could the market already be factoring in all of that future growth potential?

See what the numbers say about this price — find out in our valuation breakdown.

NYSE:ALK PE Ratio as at Sep 2025
NYSE:ALK PE Ratio as at Sep 2025

Stay updated when valuation signals shift by adding Alaska Air Group to your watchlist or portfolio. Alternatively, explore our screener to discover other companies that fit your criteria.

Build Your Own Alaska Air Group Narrative

If you see things differently or want to dive into the numbers yourself, you can craft your own Alaska Air Group narrative in just a few minutes. Do it your way.

A great starting point for your Alaska Air Group research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.