Alaska Air (ALK) investor relations material

Executive summary

• Achieved Q2 2025 adjusted EPS of $1.78, exceeding guidance, with strong premium, cargo, and loyalty performance, and improved Hawaiian operations contributing to the first profitable quarter since 2019.

• Record Q2 operating revenue of $3.7B, up 2% year-over-year, driven by premium revenue growth and successful integration of Hawaiian assets.

• Integration of Hawaiian Holdings is progressing, with synergy and commercial initiatives contributing to results and double-digit margin improvements.

• Operational disruption from an IT outage and a cybersecurity incident at Hawaiian in June 2025 were managed without material impact on operations.

• Announced new international routes (Seoul, Rome, Tokyo Narita) and expanded fleet, including five additional Boeing 787s.

Financial highlights

• Q2 2025 GAAP net income: $172M; adjusted net income: $215M; diluted EPS: $1.42; adjusted pretax margin: 8.0%.

• Q2 pre-tax margin ranked in the industry's top three; total liquidity at $3B, net leverage at 2.4x, and debt-to-capital at 60%.

• Q2 unit costs up 6.5% year-over-year, in line with guidance, driven by labor, airport real estate, and maintenance costs.

• Fuel averaged $2.39/gallon in Q2; Q3 expected at $2.45/gallon.

• Repurchased $428M in shares in Q2, $535M year-to-date, more than doubling original repurchase expectations.

Outlook and guidance

• Q3 adjusted EPS guidance: $1.00–$1.40, including IT outage impact; full-year adjusted EPS expected at least $3.25.

• Full-year 2025 capacity expected up 2% year-over-year; Q3 capacity to be down ~1%, Q4 down ~2%.

• Unit revenues expected to increase sequentially in 2H 2025, with positive demand momentum and improved industry capacity trends.

• Q3 unit costs expected up mid to high single digits year-over-year, improving in Q4 due to cost synergy realization.

• Targeting $10 EPS by 2027 and $1B incremental profit through Alaska Accelerate initiatives.