Alaska Air Group Inc. (NYSE:ALK) said Monday it expects third-quarter adjusted earnings per share to come in at the low end of its prior $1.00 to $1.40 forecast, as higher fuel prices and operational issues weighed on results.
Refinery disruptions on the West Coast lifted the airline’s expected fuel cost to $2.50 to $2.55 per gallon, above its earlier estimate of about $2.45. Weather, air traffic control delays, and a July IT outage added expenses, with the outage alone projected to trim about 10 cents per share.
Alaska Air said revenue trends remain solid, with unit revenue tracking near the high end of guidance and yields turning positive in August. Demand for premium seating and a double-digit rebound in corporate travel since the second quarter helped offset higher costs.
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The company credited the August launch of its Atmos Rewards loyalty program with record media impressions. Its new Atmos Rewards Summit Visa Infinite Card surpassed year-end enrollment targets within two weeks, showing traction beyond Alaska’s West Coast and Hawai’i hubs.
Industry analysts say low-cost carriers face growing pressure as larger rivals capture a greater share of post-pandemic demand. They note that low-cost airlines are struggling to keep pace with legacy competitors that can better absorb volatile expenses.
For fiscal 2025, Alaska expects adjusted earnings of more than $3.25 per share, below analyst estimates of $3.81. The company also projected an effective tax rate of about 30% for the third quarter, with minimal cash taxes.
Price Action: ALK shares are trading lower by 1.81% to $62.22 at last check Monday.
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