What happened

Shares of Alaska Air Group (ALK -1.66%) rose 10.3% in April, according to data provided by S&P Global Market Intelligence, after the airline posted first-quarter results that suggest Alaska is finally ready to regain its altitude following a 2016 acquisition that has weighed heavily in recent years.

So what

Alaska Air had been a laggard among airlines year to date heading into April, down 7.8% through March 30, but that all changed in April. The entire airline sector got a boost after Delta Air Lines raised its first-quarter earnings guidance on April 2 and said underlying passenger demand remains solid.

An Alaska Air plane in flight

Alaska Air Group is gaining altitude. Image source: Alaska Air Group.`

Alaska did its part later in the month, posting first-quarter earnings of $0.17 per share, up from $0.14 per share a year prior and easily beating analyst expectations for $0.12 per share. Total operating revenue was $1.88 billion, up 2% year over year and slightly ahead of consensus. The airline had lowered expectations for the quarter in early March.

Alaska has experienced considerable turbulence since its December 2016 purchase of Virgin America, but at an investor day last November, the company laid out a plan to improve profitability by reallocating assets toward areas of strength, generating new fee revenue, and better controlling costs. The company believes it can generate pre-tax margins of between 13% and 15%, well short of the 24% margin it briefly enjoyed prior to the merger but an improvement over the single-digit results of 2018.

The airline was hit during the first quarter with a harsh winter at its Seattle hub, resulting in more than 1,000 flight cancellations, and weakness in transcontinental traffic, but management believes its strategy is going to plan.

"We see our initiatives gaining traction, and we see momentum in the business," company CEO Brad Tilden said on a post-earnings call with analysts. "To put it more directly, we believe we're on track to deliver higher margins and returns in 2019 as we indicated last quarter and at investor day."

Now what

Among Alaska's challenges in recent years have been a Delta buildup in Alaska's Seattle base and the Virgin America deal that also left Alaska more exposed to a hypercompetitive California market that has eaten into results. Both of those headwinds appear to be fading, with growth slowing at Seattle and Alaska shifting its network toward flights where it doesn't face heavy competition at the San Francisco hub it acquired when it bought Virgin America.

Alaska attributed its first-quarter revenue increase to improved transcontinental pricing in the last two weeks of March. If the airline can keep that trend going, that should help boost second-quarter results and sustain its momentum.