Alaska Air Group reported second quarter 2026 financial results for the period ending June 30, 2026, posting a GAAP net loss of $76 million, or $0.68 per share, compared to net income of $172 million, or $1.42 per share, in the prior-year period. Excluding special items, the company reported an adjusted net loss of $102 million, or $0.92 per share, beating analyst expectations of a $0.99 loss. The quarter was defined by a sharp spike in fuel costs that offset strong underlying operational and revenue performance, though the company returned to profitability in June with double-digit pretax margins.

"Our second quarter results were defined by a fuel spike outside our control — but underneath it, this company is executing better than ever," said CEO Ben Minicucci. "Absent the fuel headwind, we would have delivered a solidly profitable quarter."

Q2 2026 Financial Performance

Total operating revenue for the second quarter grew 10% year-over-year to $4.065 billion, driven by a 9% increase in passenger revenue to $3.644 billion and a 23% rise in loyalty program other revenue to $258 million. Unit revenue (RASM) improved 8.6% to 16.72¢, with June producing double-digit unit revenue growth. Revenue performance was impacted by historic rainstorms in Hawaiʻi in March, which reduced system unit revenue by approximately 3 points in the quarter.

Operating Expenses and Fuel Impact

Second quarter economic fuel cost was $4.43 per gallon, an increase of 85% year-over-year, resulting in $600 million of incremental fuel cost for the period. Non-fuel unit costs (CASMex) increased 6.5% year-over-year on 1% capacity growth. The year-over-year increase reflects transitory factors, including a one-time employee recognition award tied to achieving a single passenger service system and crew training costs for international widebody operations.

Liquidity and Balance Sheet

In response to the elevated fuel price environment, Alaska Air Group proactively raised $1 billion in financing during the quarter, comprising $500 million of 6.5% senior unsecured notes and $500 million in term loans secured by assets associated with the Atmos™ Rewards program. The company held $3.8 billion in available liquidity at quarter end. The company generated $606 million of operating cash flow during the first six months of 2026 and held approximately $20 billion of unencumbered assets as of June 30, 2026.

Operational and Commercial Highlights

Alaska Air Group achieved several key milestones during the quarter, including leading the industry in year-to-date on-time performance and transitioning to a single passenger service system (PSS). New transatlantic service was launched from Seattle with flights to Rome, London, and Reykjavik. The company announced an agreement to add four 737-800 freighter aircraft to its cargo fleet, with service expected to begin in early 2027. Hawaiian Airlines also joined the oneworld alliance during the period.

Q3 2026 Outlook

Alaska Air Group expects a meaningful inflection in financial performance beginning in Q3, supported by a strong demand backdrop. The company anticipates third quarter earnings between break even and $1 per share, with economic fuel costs expected to average $3.75 per gallon. Capacity growth is expected to be 2% to 3% year-over-year, driven entirely by long-haul international flying.

Alaska Air Group (NYSE: ALK) projects third-quarter adjusted earnings per share (EPS) of $0 to $1, missing the analyst estimate of $1.38, as the carrier navigates elevated fuel expenses and rising operational costs. The company reported that economic fuel cost for the second quarter reached $4.43 per gallon, an 85% increase year-over-year, significantly impacting profitability. Despite a forecasted moderation in fuel prices to $3.75 per gallon for Q3, the cost structure remains a headwind against the bottom line.

Looking ahead to the third quarter, Alaska Air expects capacity to expand by approximately 2% to 3% compared to the same period last year. However, the carrier anticipates that non-fuel unit costs will increase in the low to mid single digits on a year-over-year basis. This indicates that inflationary pressures are affecting expenses beyond just fuel, constraining margin expansion even as available seat miles grow.

The following table summarizes the key financial and operational metrics provided by the airline:

The guidance underscores the uncertainty regarding the final impact of fuel and operational expenses on earnings. The airline is actively managing its capacity and cost structure in response to the changing economic environment.