Alaska Air Group, Inc.
Thesis
Alaska Airlines is positioned to become the dominant player on the West Coast due to its low-cost structure and potential for capacity expansion at key airports like LAX and SFO. The company has opportunities to swap gates and focus on California, which is more valuable for its operations than expanding to the East Coast. The risk/reward is skewed in favor of a long position as Alaska could significantly increase its market share and profitability.
Did it work?
The long thesis for Alaska Airlines was based on its potential for market dominance and profitability through capacity expansion and a low-cost structure. However, with a price performance decline of 40.1% over 112 months, it is clear that the anticipated growth and market share increase did not materialize, leading to a failed investment thesis.
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