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ALK Q3 Earnings Beat on Strong Yields Despite Fuel Pressure
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Key Takeaways
Alaska Air's Q3 adjusted EPS of 36 cents beat estimates by 2.9%, while revenues rose 14.4% to $4.31 billion.
ALK's fuel expenses rose 59.5% to $1.21 billion, weighing on profitability despite a 13.4% increase in yields.
ALK projects a Q4 adjusted loss of $2-$2.50 per share, with fuel costs expected at $4.65-$4.85 per gallon.
Alaska Air Group, Inc. (ALK - Free Report) reported third-quarter 2026 adjusted earnings of 36 cents per share, excluding certain tax impacts, beating the Zacks Consensus Estimate of 35 cents by 2.9%. The company had reported adjusted earnings of $1.05 per share a year earlier. Higher fuel expenses weighed on profitability despite strong revenue momentum.
Operating revenues increased 14.4% year over year to $4.30 billion but missed the consensus mark of $4.31 billion marginally by 0.1%. Revenue per available seat mile or RASM, rose 11.7%, supported by strong yields, premium demand and loyalty revenues.
Alaska Air Group, Inc. Price, Consensus and EPS Surprise
Passenger revenues increased 13.5% year over year to $3.89 billion. Loyalty program other revenues rose 31.5% year over year to $263 million, while cargo and other revenues advanced 12.7% to $160 million.
Premium revenues grew approximately 25% year over year, representing more than 36% of total revenues. Loyalty program cash remuneration increased 21% to $721 million, while managed corporate revenues jumped 30% year over year. Diversified revenues, representing revenues outside the main cabin, accounted for 54% of the company's total revenues.
Alaska Air Sees Strong Yields Despite Softer Traffic
Consolidated traffic, measured in revenue passenger miles, remained essentially flat year over year, while capacity increased 2.4%. With capacity growth outpacing traffic, the consolidated load factor declined 2 percentage points to 82.8%.
Passenger volumes decreased 1.1% year over year to 15.7 million. However, yield increased 13.4% to 18.73 cents, while passenger revenue per available seat mile rose 10.9% year over year to 15.52 cents.
Revenue performance reflected improving pricing trends, with September yield increasing approximately 17% year over year. The gains came despite headwinds in Hawaii, investments in strategic growth markets and rapid international expansion.
ALK Faces a Sharp Increase in Fuel Expenses
Total operating expenses increased 16.8% year over year to $4.23 billion, outpacing revenue growth. Aircraft fuel expenses rose 59.5% year over year to $1.21 billion as economic fuel cost climbed 57% to $3.94 per gallon from $2.51. Fuel consumption increased 1.7%.
Wages and benefits rose 5% year over year to $1.29 billion, while landing fees and other rentals increased 9%. Aircraft maintenance expenses climbed 8% year over year, while selling expenses and food and beverage service costs each advanced 10%.
Other operating expenses increased 16% year over year, further pressuring profitability. These increases more than offset a decline in special-item costs.
Alaska Air Keeps Non-Fuel Unit Costs in Check
Cost per available seat mile excluding fuel, freighter costs, performance-based pay and special items increased 4.4% to 11.46 cents from 10.98 cents a year ago.
The increase was within management's prior expectation for low-to-mid-single-digit growth. Adjusted operating expenses, excluding these items, rose to $2.87 billion from $2.68 billion.
ALK's Profitability Weakens Under Fuel Pressure
Adjusted pretax income declined to $49 million from $173 million a year earlier. Adjusted pretax margin contracted to 1.1% from 4.6%. Adjusted net loss totaled $35 million compared to adjusted net income of $123 million in the prior-year quarter.
On a reported basis, operating income declined 44.6% year over year to $82 million. GAAP net loss totaled $147 million or $1.32 per share compared to net income of $73 million or 62 cents per share, a year ago.
A cumulative tax adjustment related to previously recognized first-half losses reduced third-quarter adjusted earnings by 67 cents per share.
Alaska Air Maintains Liquidity Amid Rising Leverage
Operating cash flow totaled $149 million during the third quarter and $755 million for the first nine months of 2026. The company ended September with $3.3 billion in available liquidity.
Cash and cash equivalents were $835 million, while marketable securities totaled $1.40 billion. Long-term debt and finance leases, including current maturities, reached $6.16 billion.
Adjusted net debt to EBITDAR increased to 5.5 times from 2.9 times at year-end 2025, while debt to capitalization rose to 66% from 59%.
ALK Projects a Fourth-Quarter Loss on Higher Fuel Costs
For the fourth quarter of 2026, Alaska Air expects an adjusted loss of $2-$2.50 per share. Capacity is projected to increase 1-1.5%, with growth concentrated in international operations.
Unit revenues are expected to rise in the low double digits, while non-fuel unit costs are projected to increase in the mid-single digits. The outlook assumes an economic fuel cost of $4.65-$4.85 per gallon.
For full-year 2026, management anticipates an adjusted loss of $5-$5.50 per share, reflecting $1.8 billion in fuel expenses above its initial plan.
Delta Air Lines (DAL - Free Report) reported third-quarter 2026 earnings (excluding 57 cents from non-recurring items) of $1.72 per share, missing the Zacks Consensus Estimate of $1.80 by 4.44%. Earnings increased year over year despite sharply higher fuel costs and rising non-fuel expenses.
Adjusted revenues climbed 16% year over year to $17.59 billion but missed the consensus estimate of $17.74 billion by 0.9%. Broad demand strength and healthy yields lifted adjusted total revenue per available seat mile or TRASM, 15%, while premium and diversified revenue streams continued to expand.
J.B. Hunt Transport Services, Inc. (JBHT - Free Report) reported third-quarter 2026 earnings of $1.82 per share, up 3.4% from $1.76 a year ago. The figure beat the Zacks Consensus Estimate of $1.81 by 0.6%.
Operating revenues climbed 20.4% year over year to $3.68 billion and surpassed the consensus mark of $3.56 billion by 3.2%. Stronger pricing, an 8% increase in Intermodal loads and higher brokerage volumes supported growth. However, elevated driver-related expenses, fuel costs and insurance claims pressured profitability.
United Airlines Holdings, Inc. (UAL - Free Report) reported third-quarter 2026 adjusted earnings of $2.54 per share, down 8.6% year over year and below the Zacks Consensus Estimate of $2.60 by 2.3%. Higher fuel expenses weighed on profitability despite strong revenue growth.
Operating revenues rose 17.4% to $17.88 billion but missed the consensus mark of $17.91 billion by 0.2%. A 15.9% increase in total revenue per available seat mile or TRASM, supported the top line, driven by strength across premium, loyalty and contracted business revenues.
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ALK Q3 Earnings Beat on Strong Yields Despite Fuel Pressure
Key Takeaways
Alaska Air Group, Inc. (ALK - Free Report) reported third-quarter 2026 adjusted earnings of 36 cents per share, excluding certain tax impacts, beating the Zacks Consensus Estimate of 35 cents by 2.9%. The company had reported adjusted earnings of $1.05 per share a year earlier. Higher fuel expenses weighed on profitability despite strong revenue momentum.
Operating revenues increased 14.4% year over year to $4.30 billion but missed the consensus mark of $4.31 billion marginally by 0.1%. Revenue per available seat mile or RASM, rose 11.7%, supported by strong yields, premium demand and loyalty revenues.
Alaska Air Group, Inc. Price, Consensus and EPS Surprise
Alaska Air Group, Inc. price-consensus-eps-surprise-chart | Alaska Air Group, Inc. Quote
ALK Benefits From Diversified Revenue Growth
Passenger revenues increased 13.5% year over year to $3.89 billion. Loyalty program other revenues rose 31.5% year over year to $263 million, while cargo and other revenues advanced 12.7% to $160 million.
Premium revenues grew approximately 25% year over year, representing more than 36% of total revenues. Loyalty program cash remuneration increased 21% to $721 million, while managed corporate revenues jumped 30% year over year. Diversified revenues, representing revenues outside the main cabin, accounted for 54% of the company's total revenues.
Alaska Air Sees Strong Yields Despite Softer Traffic
Consolidated traffic, measured in revenue passenger miles, remained essentially flat year over year, while capacity increased 2.4%. With capacity growth outpacing traffic, the consolidated load factor declined 2 percentage points to 82.8%.
Passenger volumes decreased 1.1% year over year to 15.7 million. However, yield increased 13.4% to 18.73 cents, while passenger revenue per available seat mile rose 10.9% year over year to 15.52 cents.
Revenue performance reflected improving pricing trends, with September yield increasing approximately 17% year over year. The gains came despite headwinds in Hawaii, investments in strategic growth markets and rapid international expansion.
ALK Faces a Sharp Increase in Fuel Expenses
Total operating expenses increased 16.8% year over year to $4.23 billion, outpacing revenue growth. Aircraft fuel expenses rose 59.5% year over year to $1.21 billion as economic fuel cost climbed 57% to $3.94 per gallon from $2.51. Fuel consumption increased 1.7%.
Wages and benefits rose 5% year over year to $1.29 billion, while landing fees and other rentals increased 9%. Aircraft maintenance expenses climbed 8% year over year, while selling expenses and food and beverage service costs each advanced 10%.
Other operating expenses increased 16% year over year, further pressuring profitability. These increases more than offset a decline in special-item costs.
Alaska Air Keeps Non-Fuel Unit Costs in Check
Cost per available seat mile excluding fuel, freighter costs, performance-based pay and special items increased 4.4% to 11.46 cents from 10.98 cents a year ago.
The increase was within management's prior expectation for low-to-mid-single-digit growth. Adjusted operating expenses, excluding these items, rose to $2.87 billion from $2.68 billion.
ALK's Profitability Weakens Under Fuel Pressure
Adjusted pretax income declined to $49 million from $173 million a year earlier. Adjusted pretax margin contracted to 1.1% from 4.6%. Adjusted net loss totaled $35 million compared to adjusted net income of $123 million in the prior-year quarter.
On a reported basis, operating income declined 44.6% year over year to $82 million. GAAP net loss totaled $147 million or $1.32 per share compared to net income of $73 million or 62 cents per share, a year ago.
A cumulative tax adjustment related to previously recognized first-half losses reduced third-quarter adjusted earnings by 67 cents per share.
Alaska Air Maintains Liquidity Amid Rising Leverage
Operating cash flow totaled $149 million during the third quarter and $755 million for the first nine months of 2026. The company ended September with $3.3 billion in available liquidity.
Cash and cash equivalents were $835 million, while marketable securities totaled $1.40 billion. Long-term debt and finance leases, including current maturities, reached $6.16 billion.
Adjusted net debt to EBITDAR increased to 5.5 times from 2.9 times at year-end 2025, while debt to capitalization rose to 66% from 59%.
ALK Projects a Fourth-Quarter Loss on Higher Fuel Costs
For the fourth quarter of 2026, Alaska Air expects an adjusted loss of $2-$2.50 per share. Capacity is projected to increase 1-1.5%, with growth concentrated in international operations.
Unit revenues are expected to rise in the low double digits, while non-fuel unit costs are projected to increase in the mid-single digits. The outlook assumes an economic fuel cost of $4.65-$4.85 per gallon.
For full-year 2026, management anticipates an adjusted loss of $5-$5.50 per share, reflecting $1.8 billion in fuel expenses above its initial plan.
Currently, ALK has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Q3 Performance of Other Transportation Companies
Delta Air Lines (DAL - Free Report) reported third-quarter 2026 earnings (excluding 57 cents from non-recurring items) of $1.72 per share, missing the Zacks Consensus Estimate of $1.80 by 4.44%. Earnings increased year over year despite sharply higher fuel costs and rising non-fuel expenses.
Adjusted revenues climbed 16% year over year to $17.59 billion but missed the consensus estimate of $17.74 billion by 0.9%. Broad demand strength and healthy yields lifted adjusted total revenue per available seat mile or TRASM, 15%, while premium and diversified revenue streams continued to expand.
J.B. Hunt Transport Services, Inc. (JBHT - Free Report) reported third-quarter 2026 earnings of $1.82 per share, up 3.4% from $1.76 a year ago. The figure beat the Zacks Consensus Estimate of $1.81 by 0.6%.
Operating revenues climbed 20.4% year over year to $3.68 billion and surpassed the consensus mark of $3.56 billion by 3.2%. Stronger pricing, an 8% increase in Intermodal loads and higher brokerage volumes supported growth. However, elevated driver-related expenses, fuel costs and insurance claims pressured profitability.
United Airlines Holdings, Inc. (UAL - Free Report) reported third-quarter 2026 adjusted earnings of $2.54 per share, down 8.6% year over year and below the Zacks Consensus Estimate of $2.60 by 2.3%. Higher fuel expenses weighed on profitability despite strong revenue growth.
Operating revenues rose 17.4% to $17.88 billion but missed the consensus mark of $17.91 billion by 0.2%. A 15.9% increase in total revenue per available seat mile or TRASM, supported the top line, driven by strength across premium, loyalty and contracted business revenues.