Alaska Air posts $76M loss as Iran war drives up jet fuel costs

Airline issues Q3 guidance projecting breakeven to $1.00 per share

Alaska Air Group swung to a second-quarter loss of $76 million as rising fuel costs driven by the war in Iran constrained supplies and eroded margins, the Seattle-based carrier reported Tuesday.

The airline reported a loss of $76 million, or 68 cents a share, compared with a profit of $172 million, or $1.42 a share, in the same period a year earlier. Stripping out certain one-time items, Alaska reported an adjusted loss of 92 cents a share, narrower than the 99-cent loss analysts had expected, according to FactSet.

The swing was driven by a spike in fuel costs. Alaska said its economic fuel cost was $4.43 a gallon, up 85% year over year and adding $600 million in incremental costs during the quarter.

“Absent the fuel headwind, we would have delivered a solidly profitable quarter,” Chief Executive Officer Ben Minicucci said in a statement.

Revenue grew to $4.07 billion from $3.7 billion a year prior, missing the $4.09 billion analysts had projected, according to FactSet. Capacity rose 1% compared with the same period a year earlier.

The company in April suspended its full-year profit guidance, citing uncertainty over fuel prices. On Tuesday, Alaska issued guidance for the third quarter, projecting economic fuel prices of $3.75 a gallon and adjusted earnings in a range of breakeven to $1.00 per share, with capacity up between 2% and 3%. Analysts polled by FactSet were expecting $1.47 a share in adjusted earnings during the third quarter, according to the company.

“We expect a meaningful inflection in financial performance beginning in the third quarter,” the company said.

Shares in Alaska were down 2.1% in after-hours trading Tuesday.

The company also announced it entered long-term lease agreements to add four 737-800 Boeing Converted Freighters to its cargo fleet, expected to enter service in the first half of next year. Alaska plans to replace Hawaiian Airlines’ retiring Boeing 717 fleet with Hawaiian-branded Boeing 737-800 aircraft staffed by Honolulu-based pilots and flight attendants, focusing on Neighbor Island service, according to the company.