Alaska Air Group (ALK) investor relations material

Executive summary

• Q3 revenue rose 14% YoY to $4.308B on 2.4% capacity growth, but elevated fuel costs pressured earnings.

• GAAP net loss was $147M, or $1.32/share, including a $151M tax adjustment; adjusted net loss was $35M, or $0.31/share, while adjusted results excluding specified tax impacts were $40M, or $0.36/share.

• Fuel costs drove a shift from expected full-year pretax income to a pretax loss; quarter-end liquidity was $3.3B.

Financial highlights

• Q3 operating revenue was $4.308B, up 14% YoY; passenger revenue rose 13% to $3.885B, loyalty program other revenue 32% to $263M, and cargo and other revenue 13% to $160M.

• Operating income was $82M versus $148M a year earlier; operating expenses increased 17% to $4.226B, including fuel expense up 60% to $1.214B.

• Nine-month revenue increased 10% to $11.673B; operating loss was $365M and net loss was $416M, versus operating income of $228M and net income of $79M in 2025.

• Nine-month adjusted net loss was $329M, or $2.93/share, versus adjusted net income of $243M, or $2.01/share, in 2025.

• Q3 operating special items were $25M; nine-month special items were $102M, primarily integration, employee, technology-transition and litigation costs.

Outlook and guidance

• Q4 adjusted loss/share guidance is ($2.50)-($2.00); FY 2026 adjusted loss/share guidance is ($5.50)-($5.00), including $1.8B of fuel expense above plan.

• Q4 capacity is expected to rise 1%-1.5% YoY, concentrated in international flying; RASM is expected to grow low double digits and non-fuel unit costs mid-single digits.

• Q4 economic fuel cost is forecast at $4.65-$4.85/gal, $650M above initial plan; fuel costs are expected to remain elevated and volatile amid supply and refinery disruptions.

• Overhead initiatives announced after quarter-end are expected to generate ~$100M of 2027 savings; a workforce reduction affected ~200 employees and is expected to incur ~$11M of Q4 2026 costs.

• Management expects at least $3-$4 of core earnings improvement next year regardless of fuel; more specific non-fuel unit-cost guidance is planned for January.