Alaska Air Group (ALK) Q1 2026 earnings summary

Executive summary

• Reported a Q1 2026 GAAP net loss of $193 million and adjusted net loss of $192 million ($1.68 per share), driven by sharply higher fuel prices and network disruptions from severe weather and civil unrest, but operating cash flow reached $421 million, reflecting resilient demand.

• Total Q1 revenues rose 5% year-over-year to $3.3 billion on 1.7% capacity growth, with unit revenue up 3.5% and premium, loyalty, and cargo segments delivering strong growth.

• Achieved major integration milestones, including a single passenger service system, Hawaiian Airlines joining Oneworld, and a unified mobile app, enhancing network and loyalty benefits.

• Premium product retrofits and loyalty initiatives, including Atmos Rewards and co-brand partnerships, drove higher non-main cabin revenue and double-digit loyalty growth, especially in Hawai'i.

• Management remains confident in long-term EPS targets, citing strong execution on strategic initiatives and a healthy balance sheet, despite suspending full-year guidance amid fuel volatility.

Financial highlights

• Q1 revenues reached $3.3 billion, up 5% year-over-year; unit revenues increased 3.5%; premium revenue up 8%, loyalty revenue up 12%, and managed corporate revenue up 19%.

• Adjusted loss per share was $1.68, ahead of revised expectations; adjusted pretax margin was (8.6)%.

• First quarter unit costs (CASMex) rose 6.3% year-over-year, in line with expectations, driven by airport, maintenance, and pilot training expenses.

• Fuel costs were over $100 million higher in Q1, with a $0.70 EPS impact; Q2 fuel costs expected to be $600 million higher, impacting EPS by $3.60.

• Ended quarter with $2.9 billion in liquidity, $20 billion in unencumbered assets, and net leverage at 3.3x; debt-to-capital ratio at 61%.

Outlook and guidance

• Q2 capacity expected to be up ~1% year-over-year, focused on long-haul international growth; North America capacity slightly down.

• Q2 unit revenues expected to achieve high single-digit gains, with a path to 10% despite Hawaii drag; system RASM gains anticipated in low double digits.

• Q2 unit costs projected to be 1.5 points above Q1, with normalization expected in 2H26; Q2 fuel costs projected at $4.50/gallon.

• Q2 EPS estimated at a loss of ~$1 per share; full-year 2026 guidance suspended due to fuel price volatility.

• Long-term EPS target of $10 remains, contingent on fuel normalization and continued execution.