Alaska Air Group, Inc.

AI-generated fair value estimate for this company.

Method: Multi-stage 10-year unlevered FCF DCF. Base FCF of $300M for FY2026 (TTM FCF was -$350M per stockanalysis.com, reflecting elevated fleet capex of roughly $1.4-1.6B/yr post-Hawaiian Airlines acquisition), then FCF projected at $600M FY2027, $750M FY2028, $850M FY2029, $930M FY2030 as merger synergies (management's 'Alaska Accelerate' plan targets EPS of at least $10 and 11-13% pretax margins by 2027) are realized and capex normalizes; years 6-10 grown at 3%/yr; discount rate of 10% (reflects elevated leverage and airline-industry cyclicality; Altman Z-score near 1.0 per stockanalysis.com); terminal growth of 2.5%; net debt of $4.95B (total debt $7.62B less cash $2.66B) subtracted; 111.6M diluted shares outstanding.

Reasoning: Alaska is a capital-intensive airline currently in a post-acquisition capex-heavy phase with negative trailing free cash flow, so a DCF anchored on gradual normalization toward management's own 2027 targets (rather than extrapolating either the current trough or the target immediately) better captures its earnings power than a static multiple; a higher discount rate reflects the balance-sheet and cyclical risk inherent to airlines.