Alaska Air Group suspended its full-year 2026 earnings guidance and posted a first-quarter net loss of $193 million, citing fuel price volatility driven by geopolitical factors as the primary source of uncertainty, the company said April 20.
The Seattle-based airline reported an adjusted loss per share of $1.68 for the quarter ending March 31, compared to an adjusted loss of $0.77 per share a year earlier. First-quarter revenue totaled $3.3 billion, up 5% year over year. Fuel averaged $2.98 per gallon for the quarter, up 14.2% from $2.61 a year earlier, with aircraft fuel expense rising 17% to $796 million.
In announcing the guidance suspension, the company stated: "Until conditions stabilize and we have better sight to earnings beyond the current quarter, we have suspended full-year guidance." CEO Ben Minicucci, in a statement, said the results nonetheless showed the company's long-term strategy was working despite the volatile environment.
For the second quarter, Alaska Air forecast an adjusted loss of about $1.00 per share. The per-gallon fuel forecast of roughly $4.50 for Q2 would translate to about $600 million in incremental expense, a drag the company quantified as approximately $3.60 per share in earnings impact. The company said that absent the fuel price spike, it would have guided to a profitable quarter.
In lieu of traditional earnings-per-share guidance for Q2, the company provided unit revenue and unit cost assumptions. Capacity is expected to be up about 1% year over year, with second-quarter unit revenues trending up high single digits year over year and a path to 10% growth if demand holds. Unit costs are expected to run about 1.5 percentage points higher than in the first quarter before inflecting to low single-digit growth in the second half of the year.
Results were also weighed down by localized disruptions — historic rainstorms in Hawaii and civil unrest in Puerto Vallarta ahead of spring break — in markets representing about 30% of the company's capacity. The company said that excluding higher fuel costs and those disruptions, first-quarter results would have exceeded the midpoint of its original expectations.
Shares of Alaska Air were trading at $42.80 after hours, a decline of 1.7%, according to Bloomberg, capping a year-to-date slide of roughly 13% through Monday's close.
The fuel cost surge stems from the broader impact of the U.S.-Iran war on oil markets. Jet fuel in the U.S. rose to $4.88 a gallon as of last week, up from $2.50 a gallon on Feb. 27, as the effective closure of the Strait of Hormuz disrupted global crude and refined fuel flows. Airlines including Delta, JetBlue, and United have raised checked baggage fees in response, while carriers including United have trimmed international capacity.
Not all carriers have been equally squeezed. Delta Air Lines and American Airlines each raised their first-quarter revenue forecasts after demand strength more than offset roughly $400 million in additional fuel costs at each airline. Delta CEO Ed Bastian noted the fuel surge was likely to prove more damaging to budget carriers than to those whose customers skew toward premium and corporate travel.
Despite the pressure, Alaska Air said it ended the quarter with $2.9 billion in total liquidity after expanding its revolving credit facility, and approximately $20 billion in unencumbered assets. The company also repurchased 4.7 million shares for $203 million during the quarter.