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DATE
Wed, Oct. 21, 2026
CALL PARTICIPANTS
- Vice President of Finance, Planning, and Investor Relations – Ryan John
- Chief Executive Officer – Benito Minicucci
- Executive Vice President and Chief Commercial Officer – Andrew R. Harrison
- Executive Vice President and Chief Financial Officer – Shane R. Tackett
- President of Alaska Air Cargo – Jason Matthew Berry
TAKEAWAYS
- Total Revenue — $4.3 billion, representing 14% growth year over year driven by strong underlying commercial momentum.
- GAAP Net Loss — $147 million or $1.32 loss per share, reflecting the impact of unprecedented fuel prices totaling $1.8 billion in additional costs for the year.
- Adjusted Net Income — $40 million, which excludes special items and the impact of a revised tax rate methodology.
- Adjusted EPS — $0.36, representing a result that excludes a cumulative catch-up adjustment of $0.67 per share related to tax benefits on first-half losses.
- Unit Revenue (RASM) — growing 11.7% year over year, consistent with management’s low double digit growth expectations.
- September Yield — increasing approximately 17% year over year, contributing to total quarterly yield growth of 13.4%.
- CASM ex-fuel — rising 4.4% year over year on capacity growth of 2.4%, a sequential improvement from the 6.5% increase reported in the second quarter.
- Premium Revenue — growing 24.5% year over year and reaching more than 36% of the total revenue mix.
- Loyalty Program Cash — $721 million, representing 21% growth supported by strong credit card spend and engagement.
- Diversified Revenue — representing 54% of the total revenue mix, up 4 percentage points compared to the prior year.
- Managed Corporate Revenue — increasing 30% year over year, with future bookings also running approximately 30% above prior-year levels.
- Available Liquidity — $3.3 billion at quarter end, including unrestricted cash, marketable securities, and undrawn credit facilities.
- Unencumbered Assets — $20 billion, including 134 aircraft and the unencumbered portion of loyalty program assets.
- Debt-to-Capitalization — 66%, reflecting a stable financial position as the company prioritizes balance sheet restoration.
- Economic Fuel Price — $3.94 per gallon, which exceeded initial guidance of $3.75 per gallon due to higher crude and refining costs.
- Q4 Capacity Guidance — up 1% to 1.5% year over year, with growth concentrated primarily in international routes.
- Q4 RASM Guidance — expected to increase in the low double digits year over year, supported by continued yield strength.
- Q4 Economic Fuel Guidance — expected to average between $4.65 to $4.85 per gallon.
- Q4 Adjusted Loss Guidance — between $2.50 to $2.00 per share, inclusive of a $650 million fuel headwind versus original assumptions.
- Full Year Adjusted Loss Guidance — between $5.50 to $5.00 per share, reflecting sustained pressure from elevated energy prices.
- Fleet Deliveries — 22 aircraft deliveries scheduled for next year, including the first Boeing 737-10 MAX aircraft starting in the first quarter.
- Cargo Revenue — growing 9% year over year as the company prepares to deploy four new freighters to double narrow body capacity in Alaska and Hawaii.
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RISKS
- CEO Minicucci stated, “Despite unprecedented fuel prices that are adding $1.8 billion in cost this year and pressuring our profitability,” demand remains healthy across the network.
- CCO Harrison reported that “over 40% of our system is absorbing 6 points of unit revenue pressure” resulting from network maturation in strategic growth markets, international expansion, and regional headwinds in Hawaii.
SUMMARY
Alaska Air Group, Inc. (ALK +2.34%) reported a third quarter net loss driven by elevated fuel expenses while continuing a strategic transition toward a more diversified and resilient business model. Management reported that diversified revenues, which include premium services, loyalty program engagement, and cargo, reached 54% of the total revenue mix. The company is expanding its international presence from its Seattle hub with new nonstop service to Osaka, Japan, and Papeete, Tahiti, as it targets 15 international routes by 2030. Despite near-term profitability pressure from energy prices and network maturation costs, the company reported strong underlying demand with significant share gains in managed corporate travel and premium cabin performance. The company intends to further strengthen its global network by joining Atlantic and Pacific joint international businesses and continuing to retrofit its fleet with enhanced premium offerings.
- The company plans to file for entry into Atlantic and Pacific joint international businesses in the coming weeks to broaden connectivity with global partners.
- CCO Harrison noted that business class performance on London Heathrow routes exceeded the company’s fair market share by 3 percentage points during the quarter.
- Management announced that premium revenues reached more than 36% of the total mix, with a long-term target of 40% by 2030.
- CEO Minicucci stated that the company is “focused on the areas of the business we believe will drive higher and more resilient earnings over time” through investments in premium, international, loyalty, and cargo.
- The company launched the premium Summit card product, with roughly half of cardholders being new to the portfolio and 40% coming from outside core geographies.
- Management confirmed that the Boeing 737-10 MAX aircraft was recently certified and deliveries are expected to fit into the existing fleet plan starting late in the first quarter of next year.
INDUSTRY GLOSSARY
- ASMs: Available Seat Miles; a measure of total capacity representing the number of seats available multiplied by the miles flown.
- CASMex: Unit cost excluding fuel, freighter costs, and special items per available seat mile.
- RASM: Revenue per Available Seat Mile; the average total revenue generated for every seat mile flown.
- RPMs: Revenue Passenger Miles; the number of seats filled with revenue-paying passengers multiplied by miles flown.
- PRASM: Passenger Revenue per Available Seat Mile.
- Yield: The average revenue received per revenue passenger mile flown.
- Unencumbered Assets: Assets that are free and clear of any liens, mortgages, or other legal claims.
- Load Factor: The percentage of available seating capacity that is filled with revenue passengers.
- Managed Corporate Revenue: Revenue generated from corporate accounts managed through travel agencies or direct contracts.
Conference Call Transcript
Operator: Good morning, ladies and gentlemen, and welcome to the Alaska Air Group 2026 Third Quarter Earnings Call. At this time, all participants have been placed on mute to prevent background noise. Today’s call is being recorded and will be accessible for future playback at alaskaair.com. After our speakers’ remarks, we will conduct a question and answer session for analysts. I would now like to turn the call over to Alaska Air Group’s vice president of finance, planning, and Investor Relations, Ryan John.
Ryan John: Thank you, operator, and good morning. Thanks for joining us today to discuss our third quarter 26 earnings results. Yesterday, we issued our earnings release detailing our results. Which are available at investor.alaskaair.com. Today, you will hear updates from Benito, Andrew, and Shane. Several others of our management team are also on the line to answer your questions during the Q and A portion of the call. Air Group reported a third quarter GAAP net loss of $147 million or $1.32 loss per share.
Excluding special items and the impact of a revised tax rate, adjusted net income was $40 million and adjusted earnings per share was $0.36 As a reminder, forward-looking statements, future performance may differ materially from our actual results. Information on the risk factors that could affect our business can be found within our SEC filings. We will also refer to certain non GAAP financial measures such as adjusted earnings and unit costs excluding fuel. And as usual, we have provided a reconciliation between the most directly comparable GAAP and non GAAP measures in today’s earnings release. Over to you, Benito.
Benito Minicucci: Thanks, Ryan, and good morning, everyone. Just a few weeks ago, we laid out the next chapter for Alaska Air Group and our path to becoming a larger, more diversified, and more resilient business. Our third quarter results reinforce our confidence in that strategy. Despite unprecedented fuel prices that are adding $1.8 billion in cost this year and pressuring our profitability. Demand remains healthy. Revenue performed in line with our expectations. And we continue to execute across our initiatives in premium, loyalty, cargo, and international. All helping to drive a 7-point RASM to CASM ex spread for the quarter. Up from 2 points in Q2.
We continue to see strong momentum across the 4 strategic growth areas we highlighted at our Investor Day. We said the first chapter of Alaska Accelerate was about building the foundation and the next chapter was about harvesting the value from it. That transition is underway. The investments we have made over the last several years are driving greater scale, deepening our relevance with guests, and strengthening loyalty across our geographies. Diversified revenues now represent 54% of our total mix, up 4 points from last year and 1 point from last quarter. As this mix continues to grow, our earnings will become less dependent on fuel, and more resilient.
Premium demand remains robust with revenues reaching more than 36% of our total mix, up 3 points year over year. That reflects the strength of our products and our growing relevance across the West Coast and beyond as we build toward our 40% target by 2030. Our international franchise in Seattle is growing rapidly. We are excited to announce that next spring, we will launch year round service from Seattle to Osaka, Japan, and Papeete, Tahiti. That brings our nonstop international routes out of Seattle to 9 as we build toward 15, and our goal of becoming Seattle’s number 1 long haul international carrier by 2030.
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