Alaska Air shares profit warning on fuel surge

Alaska Air Group has warned of a larger-than-expected first-quarter loss, citing surging fuel prices and weakening demand across parts of its network.

The company said higher fuel costs linked to global oil market volatility have significantly increased pressure on earnings, with benchmark Brent crude posting one of its sharpest monthly jumps in decades, News.Az reports, citing Reuters.

According to the airline, average fuel costs are now expected to range between $2.90 and $3.00 per gallon, which could reduce earnings per share by at least $0.70.

As a result, Alaska Air Group has revised its adjusted first-quarter loss forecast to between $1.50 and $2.00 per share, down sharply from its earlier estimate of a $0.50 to $1.50 loss.

The airline said the spike in oil prices — driven in part by geopolitical tensions involving Iran — is creating one of the toughest cost environments for the aviation sector since the pandemic.

In addition to fuel inflation, Alaska Air pointed to softer demand in some markets, including reduced travel to Mexico due to unrest in Puerto Vallarta and severe weather disruptions in Hawaii, which together account for about 30% of its capacity.

The company also noted that peak travel periods, including West Coast spring break, have been affected, weighing further on short-term performance.

Despite these challenges, Alaska Air said corporate travel demand remains strong, with forward bookings over the next 90 days up more than 25% year over year.

The airline added that it remains well-positioned for the peak summer travel season, even as volatility continues to shape the broader aviation outlook.

News.Az 

By Aysel Mammadzada