Alaska Air Group (NYSE: ALK) today reported financial results for the second quarter ending June 30, 2026.
«Our second quarter results were defined by a fuel spike outside our control – but underneath it, this company is executing better than ever. We led the industry in on-time performance for the first half of the year, completed the last major technical milestone of our Hawaiian integration, launched service to Europe, and returned to profitability in June. Absent the fuel headwind, we would have delivered a solidly profitable quarter. I have never been more confident in our people, our plan, and the long-term earnings power of Alaska Air Group» – Ben Minicucci, President & CEO Alaska Air Group.
Quarter in Review
Air Group reported second quarter Generally Accepted Accounting Principles (GAAP) pretax margin of (5.3)% and GAAP net loss of $76 million, or $0.68 per share. Air Group’s second quarter adjusted pretax margin was (4.3)% and adjusted net loss was $102 million, or $0.92 per share.
| Q2 2026 Results | Prior Expectation | Actual Results |
|---|---|---|
| Capacity (ASMs) % change versus 2025 | Up ~1% | Up 1.0% |
| RASM % change versus 2025 | Up high single digits | Up 8.6% |
| CASMex % change versus 2025 | Up high single digits | Up 6.5% |
| Economic fuel cost per gallon | $4.50 | $4.43 |
| Adjusted loss per share | ~($1.00) | $(0.92) |
Second quarter total revenue grew 10% year-over-year to $4.1 billion on capacity growth of 1%, with unit revenue up 8.6%. Yields strengthened through the quarter, with June producing double digit unit revenue growth and double digit pretax profit margins.
Our revenue performance was impacted by historic rainstorms in Hawai’i in March which had a meaningful impact on April spring break travel and reduced system unit revenue by approximately 3 points in the quarter, modestly above the 2 points originally expected. Outside of Hawai’i, demand remained resilient across the network and our diversified revenue streams continue to outpace system growth: premium revenue increased 15%, cargo revenue increased 21%, and managed corporate revenue accelerated 30% year-over-year respectively. Loyalty performance was also robust, with loyalty cash remuneration up 19%.
Non-fuel unit costs increased 6.5% year-over-year on 1% capacity growth, better than prior guidance. The year-over-year increase reflects 2.5 points of transitory factors, including a one-time employee recognition award tied to achieving a single passenger service system, a year-over-year headwind from prior-year aircraft sale gains, and crew training costs for our international widebody ramp. Outside of these transitory items, core cost management was strong, gaining momentum moving into the second half of the year.
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. In response to the elevated and unpredictable fuel price environment, we proactively raised $1 billion in financing during the quarter, deliberately bolstering liquidity to the top end of our target range of 15% to 25% of trailing-12-month revenue. As the fuel environment stabilizes and our earnings profile improves, we expect to put excess liquidity towards paying down debt and bring liquidity back to the midpoint of our target range.
Third Quarter Forecast Information
With a strong demand backdrop and an improving unit cost trajectory, we expect a widening spread between unit revenue and unit costs in Q3. Coupled with continued execution on our strategic initiatives, we expect a meaningful inflection in financial performance beginning in Q3.
Third quarter capacity is expected to be up approximately 2% to 3% year-over-year, with nearly all growth coming from long-haul international flying out of Seattle, while capacity within North America will be essentially flat year-over-year.
Unit revenue is expected to improve sequentially from the second to third quarter to low double-digit growth year-over-year, supported by strong yields and demand. While Hawai’i remains a 2-3 point unit revenue headwind in the third quarter, loads are recovering and new bookings are coming in at system level yields, showing demand returning to historical levels in September.
Third quarter non-fuel unit costs are expected to increase in the low to mid single digits year-over-year, a meaningful step-down from the first half of the year, as transitory cost items are behind us and productivity improvements compound. While fuel prices remain volatile, economic fuel cost is expected to come down from second quarter levels as refining margins have recently moderated. Our guidance assumes a fuel price of $3.75 per gallon in the third quarter, reflecting July fuel costs of $3.60 per gallon, and average spot prices of $3.85 for August and September.
| Q3 2026 Expectation | |
|---|---|
| Capacity (ASMs) % change versus 2025 | Up 2% to 3% |
| RASM % change versus 2025 | Up low double digits |
| CASMex % change versus 2025 | Up low to mid single digits |
| Economic fuel cost per gallon | $3.75 |
| Adjusted earnings (loss) per share (a) | $0.00 to $1.00 |
(a) Q3 earnings per share guidance assumes non-operating expense of approximately $60 million, a tax rate of approximately 35%, and shares outstanding of approximately 113.5 million…
