Why Alaska Air’s 2026 Profit Forecast Reflects Caution on Fuel Costs

The Seattle-based Alaska Airlines has issued a cautious financial outlook for 2026. The carrier forecast a wider-than-expected first-quarter loss. Its full-year profit outlook also fell below Wall Street estimates. This conservative guidance reflects concerns over jet fuel price volatility and persistent economic uncertainty risks.

Conservative Financial Guidance

Alaska Airlines expects its annual adjusted profit per share to be in the range of $3.50 to $6.50. The midpoint of this range is below the average analyst expectation of $5.54, according to LSEG data. This cautious stance follows a period of significant market volatility last year.

For the first quarter, the airline forecasts an adjusted loss per share between $0.50 and $1.50. This range is wider than the Wall Street expectation of a $0.64 loss. Chief Financial Officer Shane Tackett stated the guidance is a more conservative approach after last year's market swings. These swings included a sharp drop in demand following a U.S. government shutdown. Similar factors also impacted the full-year forecasts of rivals like Delta Air Lines.

Fuel Price Volatility and West Coast Exposure

Fuel costs remain a major risk for the airline. Alaska Airlines is particularly exposed to West Coast refining margins. Tackett noted that a 10-cent shift in fuel prices can cause a significant 75-cent swing in the carrier's annual earnings per share. This highlights the substantial impact of jet fuel price volatility on the company's bottom line.

• A 10-cent fuel price change can swing annual EPS by 75 cents.
• The airline remains exposed to West Coast refining margins.

Demand Rebound and Timing Challenges

Despite the cautious outlook, demand trends are improving. Tackett confirmed that the airline is beginning to recapture demand lost during an abrupt booking slowdown last year. This slowdown erased an estimated $500 million in expected revenue.

Demand has strengthened sharply since early January. Yields are now above year-ago levels. Corporate bookings rebound is a key driver, up 20% year-on-year across sectors. These sectors include technology, manufacturing, and finance. Loyalty revenue has also climbed. Main-cabin revenue is tracking toward positive growth later this quarter.

However, the first-quarter loss expectation is compounded by timing issues. Much of the Q1 schedule was booked before the demand acceleration in early January. This booking lag means the airline is leaving an estimated $50 million to $100 million of potential revenue uncaptured.

Integration and Cost Pressures

The airline’s performance is also affected by its traditionally weak first quarter. This is now compounded by the similar seasonal profile of Hawaiian Airlines, as the two carriers continue their integration efforts. Furthermore, Alaska is absorbing higher labor and real-estate costs that began in the previous year. The company’s fourth-quarter earnings came in at $0.43 per share, significantly beating the analyst expectation of $0.12 per share. This strong Q4 performance provides a positive note amid the economic uncertainty risks facing the commercial aviation news sector.

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