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Airline Industry · Earnings Guidance · Fuel Costs · Travel Demand
Alaska Air Group now expects an adjusted loss per share for the first quarter of 2026 in the range of $2.00 to $1.50, primarily due to a significant increase in fuel costs and localized demand disruptions in Mexico and Hawai‘i, as disclosed in a U.S. SEC filing.
The company's stock trades at $36.16, just above its 52-week low of $35.89, reflecting a 28% year-to-date decline and a nearly 27% drop over the past six months. Despite these challenges, Alaska Air Group reported strong network demand, with unit revenue aligning with prior expectations and capacity at the high end of guidance, approximately 2% higher.
Managed corporate demand remains robust, with forward bookings for the next 90 days up more than 25% year over year, and second-quarter yields and load factors are higher compared to the previous year, with particular strength anticipated in May and June. However, external events, including unrest in Puerto Vallarta, Mexico, and severe rainstorms and flooding in Hawai‘i, impacted approximately 30% of the company’s capacity in March and April, including the peak West Coast spring break travel period.
Alaska Air Group expects demand in Hawai‘i to recover without long-term structural impact. Fuel costs surged significantly, with Singapore refining margins increasing approximately 400% since early February, from $0.45 to $2.25 per gallon, and U.S. refining costs rising about 140%.
The economic fuel price is now expected to average $2.90 to $3.00 per gallon, creating an estimated incremental earnings-per-share headwind of at least $0.70. The company stated that, absent these impacts, its results would have exceeded the midpoint of original guidance.
BMO Capital initiated coverage with an Outperform rating and a $50.00 price target, while TD Cowen adjusted its price target to $63.00 from $64.00, maintaining a Buy rating, citing updated fuel cost estimates.
