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ALK Issues Bearish Q1 View on High Fuel Costs & Operational Issues
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Key Takeaways
Alaska Air forecasts Q1 loss of $1.50-$2.00 per share, wider than prior guidance.
ALK cites fuel price surge, with refining margins up ~400%, lifting costs to ~$2.90$3.00/gal.
Weather and weak Mexico demand hit capacity, but revenue trends and bookings remain strong.
Alaska Air Group, Inc. (ALK - Free Report) has unveiled disappointing first-quarter 2026 guidance, citing issues related to higher fuel expenses and operational issues.
ALK now projects its first-quarter 2026 adjusted loss per share in the range of $1.50-$2.00 compared with the previously guided range of loss per share of 50 cents-$1.50. The downside has been attributed to higher fuel costs, coupled with operational challenges and weather disruptions, which have weighed on unit costs.
It is quite evident as of now that fuel costs have risen owing to higher crude and refining prices, with refining margins being volatile in recent weeks. ALK’s lowest cost source of fuel comes from Singapore (which accounts for almost 20% of ALK’s fuel supply), and these refining margins have grown almost 400% since early February, from an average of ~45 cents to ~$2.25 per gallon.
This has led to economic fuel price expectations to be in the range of $2.90 to $3.00 per gallon for the first quarter of 2026, which is further likely to hurt the company’s bottom line by at least 70 cents per share.
Apart from the higher fuel price, Alaska Air is grappling with multiple external events. These include weak demand in Mexico due to unrest in Puerto Vallarta, severe rainstorms and historic flooding in Hawaii, which collectively account for nearly 30% of ALK’s capacity. Impacts are being seen in both March and April, including during peak West Coast Spring Break travel periods. With respect to Hawaii, no long-term structural impact is expected, and hence, demand is likely to fully recover.
Had there been no adverse effects from the fuel, Puerto Vallarta and Hawaii storms, ALK’s results would have surpassed the midpoint of original guidance.
On the greener side, Alaska Air has been witnessing encouraging revenue trends while proceeding into the peak travel season. Consistent demand has been throughout the network. Unit revenues remain in line with previous guidance, and capacity is anticipated toward the high end of the prior guided range, up ~2% (prior view: up 1% to 2%).
Managed corporate demand remains outstanding, with forward bookings over the next 90 days up more than 25% year over year. Held second-quarter yields and load factors reflect year-over-year strength with solid growth in May and June. With 55% of the quarter’s revenue still to come, the company is all set for peak travel periods during its seasonally strongest quarter.
Zacks Rank & Stocks to Consider
Alaska Air currently carries a Zacks Rank #3 (Hold).
C.H. Robinson has an expected earnings growth rate of 15.91% for the current year. The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 10.83%. Shares of CHRW have risen 57.5% in the past year.
SkyWest, founded in 1972, is based in St. George and operates regional jets for major U.S. airlines. SKYW is the holding company for SkyWest Airlines, SkyWest Charter and SkyWest Leasing, an aircraft leasing company.
SKYW has an impressive earnings surprise track record, having surpassed the Zacks Consensus Estimate in three of the last four quarters (missed the mark in the remaining quarter). The average beat was 12.75%. The Zacks Consensus Estimate for current-year earnings has been revised upward by 3.16% over the past 60 days. For 2026, SKYW’s earnings are expected to improve 10.34% year over year.
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ALK Issues Bearish Q1 View on High Fuel Costs & Operational Issues
Key Takeaways
Alaska Air Group, Inc. (ALK - Free Report) has unveiled disappointing first-quarter 2026 guidance, citing issues related to higher fuel expenses and operational issues.
ALK now projects its first-quarter 2026 adjusted loss per share in the range of $1.50-$2.00 compared with the previously guided range of loss per share of 50 cents-$1.50. The downside has been attributed to higher fuel costs, coupled with operational challenges and weather disruptions, which have weighed on unit costs.
It is quite evident as of now that fuel costs have risen owing to higher crude and refining prices, with refining margins being volatile in recent weeks. ALK’s lowest cost source of fuel comes from Singapore (which accounts for almost 20% of ALK’s fuel supply), and these refining margins have grown almost 400% since early February, from an average of ~45 cents to ~$2.25 per gallon.
This has led to economic fuel price expectations to be in the range of $2.90 to $3.00 per gallon for the first quarter of 2026, which is further likely to hurt the company’s bottom line by at least 70 cents per share.
Apart from the higher fuel price, Alaska Air is grappling with multiple external events. These include weak demand in Mexico due to unrest in Puerto Vallarta, severe rainstorms and historic flooding in Hawaii, which collectively account for nearly 30% of ALK’s capacity. Impacts are being seen in both March and April, including during peak West Coast Spring Break travel periods. With respect to Hawaii, no long-term structural impact is expected, and hence, demand is likely to fully recover.
Had there been no adverse effects from the fuel, Puerto Vallarta and Hawaii storms, ALK’s results would have surpassed the midpoint of original guidance.
On the greener side, Alaska Air has been witnessing encouraging revenue trends while proceeding into the peak travel season. Consistent demand has been throughout the network. Unit revenues remain in line with previous guidance, and capacity is anticipated toward the high end of the prior guided range, up ~2% (prior view: up 1% to 2%).
Managed corporate demand remains outstanding, with forward bookings over the next 90 days up more than 25% year over year. Held second-quarter yields and load factors reflect year-over-year strength with solid growth in May and June. With 55% of the quarter’s revenue still to come, the company is all set for peak travel periods during its seasonally strongest quarter.
Zacks Rank & Stocks to Consider
Alaska Air currently carries a Zacks Rank #3 (Hold).
Investors interested in the Transportation sector may also consider C.H. Robinson Worldwide, Inc. (CHRW - Free Report) and SkyWest, Inc. (SKYW - Free Report) ), each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
C.H. Robinson has an expected earnings growth rate of 15.91% for the current year. The company has an impressive earnings surprise history. Its earnings outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average beat of 10.83%. Shares of CHRW have risen 57.5% in the past year.
SkyWest, founded in 1972, is based in St. George and operates regional jets for major U.S. airlines. SKYW is the holding company for SkyWest Airlines, SkyWest Charter and SkyWest Leasing, an aircraft leasing company.
SKYW has an impressive earnings surprise track record, having surpassed the Zacks Consensus Estimate in three of the last four quarters (missed the mark in the remaining quarter). The average beat was 12.75%. The Zacks Consensus Estimate for current-year earnings has been revised upward by 3.16% over the past 60 days. For 2026, SKYW’s earnings are expected to improve 10.34% year over year.