Alaska Air beats on profit but widens full-year loss forecast on fuel costs

Third-quarter revenue of $4.31bn fell short of the $4.36bn expected even as adjusted earnings per share of $0.36 topped forecasts

Alaska Air Group reported adjusted earnings per share of $0.36 for the third quarter, $0.07 above expectations, while revenue of $4.31bn fell short of the $4.36bn forecast.

The company widened its loss guidance for the rest of the year. It expects an adjusted loss per share of $2.00 to $2.50 in the fourth quarter, with capacity growing about 1% to 1.5% year over year, unit revenue rising in the low double digits, and non-fuel unit costs rising in the mid-single digits. Fuel costs are expected to run $4.65 to $4.85 per gallon. For the full year, Alaska now expects an adjusted loss per share of $5.00 to $5.50, including about $1.8bn in fuel expense above its original plan.

Chief executive Ben Minicucci said the company is not satisfied with the quarter's results or with the $1.8bn fuel headwind this year, but said he is confident Alaska can widen the gap between unit revenue and unit costs excluding fuel.

Alaska also said it intends to join the Atlantic and Pacific Joint International Businesses with oneworld and other global partners, a move aimed at broadening international connectivity and premium travel access.

The widening loss guidance for both the fourth quarter and the full year marks a sharper deterioration than the quarterly profit beat suggests, since the $1.8bn fuel overrun is now built into forward estimates rather than treated as a one-time hit. That shifts the story from one of cost control, where management points to unit revenue outpacing non-fuel unit costs, to one where fuel exposure is reshaping earnings for more than a year. The oneworld tie-up adds a longer-term network argument, but does not offset the near-term cost pressure management says it remains unsatisfied with.