Alaska Air Group has warned of a significantly wider first-quarter loss as surging fuel costs and weather-related disruptions offset otherwise strong demand trends, while executives outlined measures to manage structural cost pressures and drive long-term growth.
The airline said its adjusted loss per share for the first quarter of 2026 is now expected to be between $2.00 and $1.50, compared with a consensus estimate of a $0.98 loss. The downgrade reflects a combination of sharply higher fuel costs, unrest in Puerto Vallarta and severe storms in Hawaii - two markets that together account for around 30% of its capacity.
Fuel has emerged as the dominant headwind due to the conflict in the Middle East driving up oil prices.
Alaska said refining margins for fuel sourced from Singapore, typically its lowest-cost supply and around 20% of total consumption, have surged roughly 400% since early February, pushing expected fuel prices to $2.90-$3.00 per gallon. The increase alone is expected to create an earnings headwind of at least $0.70 per share.
Despite these pressures, Alaska pointed to resilient demand. Unit revenues are tracking in line with expectations, capacity is up around 2%, and corporate bookings over the next 90 days have risen more than 25% year-on-year. Second-quarter yields and load factors are also trending higher, particularly in May and June.
Speaking at the J.P. Morgan Industrials Conference on March 17, chief executive Ben Minicucci said the airline faces a structural “West Coast disadvantage,” with refinery closures in California driving volatility and leaving Alaska paying about $0.20 more per gallon than competitors. With consumption of roughly 100m gallons per month, every $1 rise in fuel costs translates to a $100m monthly hit.
To mitigate this, Alaska is expanding its strategy of sourcing fuel from Singapore via Hawaii, leveraging its acquisition of Hawaiian Airlines and is exploring infrastructure to tanker fuel directly to Seattle. The goal is to reduce reliance on West Coast fuel from 56% of supply to the low-to-mid 40% range within two years.
The airline has also demonstrated some pricing power, with fare increases holding in the market. Minicucci noted that offsetting a $1 increase in fuel costs would require roughly a $20 increase on an average $200 ticket, an adjustment he said remains manageable for consumers.
Strategically, Alaska is banking on several growth drivers. Integration of Hawaiian Airlines is progressing on schedule, providing both fuel sourcing advantages and access to widebody aircraft that diversify revenue streams. The airline is also expanding internationally, with a new Rome route launching in April and bookings described as “fantastic,” alongside plans to retrofit Boeing 787 aircraft with premium economy cabins.
While non-fuel costs remain under control, expansion into long-haul operations is expected to put some upward pressure on unit costs. Nonetheless, Alaska reaffirmed its longer-term target of $10 earnings per share, underpinned by cost discipline, network expansion and continued demand strength.