Alaska Airways plans new nonstop flights to Japan and Korea

Alaska Airlines aircraft.

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Alaska Air Group expects profit growth of $1 billion by 2027 and plans to ride the wave of demand for high-end travel to achieve this goal.

Alaska completed its $1.9 billion acquisition of Hawaiian Airlines in September, less than a year after signing the deal that gives it access to routes across the Pacific and wide-body aircraft like the Boeing 787 Dreamliner and Airbus A330. The two brands operate separately from each other.

The airline will launch nonstop service between its home hub, Seattle-Tacoma International Airport, and Tokyo's Narita International Airport using Hawaiian Airbus A330-200s in May, and between Seattle and Seoul's Incheon International Airport in October, Alaska said Tuesday with. Tickets for the new flights to Tokyo will go on sale on Tuesday, while fares for the latter route will go on sale in early 2025.

By 2030, Alaska plans to fly widebody aircraft from Seattle to at least a dozen international destinations, transforming the airline.

The airline announced Tuesday that it had approved a $1 billion share buyback.

Alaska also forecasts pretax margins of between 11% and 13% in 2027 and earnings per share of over $10. In October, the company estimated 2024 earnings at $3.50 to $4.50 per share, including Hawaiian's results. The company raised its fourth-quarter profit estimates to 40 cents to 50 cents per share, after previously forecasting profit of 20 cents to 40 cents.

Alaska's stocks have gained nearly 40% so far this year, more than the S&P 500, which gained 27% through Monday's close. Shares of the airline rose about 16% in morning trading on Tuesday after it released its long-term plans, hitting a more than three-year high.

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Performance of Alaska Air and S&P 500

The carrier is also launching a new “premium” credit card with its partner Bank of Americathe latest co-branding deal aimed at generating revenue from customers even when they don't fly.

Alaska is evaluating its premium seating offerings across the fleet. Chief Financial Officer Shane Tackett told CNBC that the airline is pursuing upgrade options specifically for Hawaiian's Airbus A330 as more customers are willing to pay for more space and comfort while traveling.

“If you look at the last two or three years, most of the sales growth has been in those demand areas, and I think that's likely to continue,” Tackett said. “We have a really good base product in the main cabin… but more and more people want the option to move up to premium economy or first class and we need to meet that demand.”

Tackett said more seats than ever in first class and premium economy would be purchased directly by customers rather than filled with free upgrades.

Seattle's rival Delta Air Lineswhose domestic passenger market share of 24% is second only to Alaska's Seattle's 55%, has also noticed this shift in demand for first class seats. However, Delta has a larger share of international passengers from the airport.

Alaska said it plans to offer a new lounge at San Diego International Airport. On Wednesday, Delta announced it is opening its Delta One lounge in Boston, its third after opening locations in New York and Los Angeles this year, dedicated to customers traveling in the highest floor cabin.

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Meanwhile, Tackett told CNBC that he expects further delays in Alaska's deliveries from Boeing.

A door plug popped off one of the nearly new Boeing 737 Max 9s in Alaska in January after it left the manufacturer's factory without the key bolts in place. The near-disaster and tightened quality controls have disrupted Boeing's production and deliveries to airline customers such as Alaska, United And southwest.

“I think they are making progress. This won't happen in a week. It will take time,” Tackett said of Boeing, whose new CEO Kelly Ortberg is tasked with stabilizing the plane maker. “We are in a situation where we have to focus a lot on conveying to them that quality is the most important thing; It is much more important to us than the price.”

Boeing is scheduled to release its November aircraft orders and deliveries at 11 a.m. Tuesday. That tally is expected to be hurt by a nearly two-month machinists' strike that brought production of most Boeing planes to a halt.

Boeing announced Tuesday that 737 production has resumed at its Renton, Washington, plant and that production will begin at its Everett, Washington, plant in the next few days.