Alaska Air forecasts third-quarter profit of $0 to $1 a share, missing estimates

Alaska Air forecast third-quarter adjusted earnings of $0 to $1 per share, below analysts’ average estimate of $1.38 per share, as fuel volatility continued to weigh on results even after second-quarter losses came in slightly better than expected. The airline reported a second-quarter adjusted loss of $102 million, or 92 cents per share, compared with analysts’ average estimate for a 99-cent loss, according to LSEG. GAAP net loss was $76 million, or 68 cents per share, and adjusted pretax margin was negative 4.3%. Revenue rose 10% from a year earlier to $4.1 billion on 1% capacity growth, while unit revenue increased 8.6%. Alaska said second-quarter economic fuel cost rose 85% year over year to $4.43 per gallon, adding $600 million of incremental fuel expense. For the third quarter, it expects fuel cost to fall to about $3.75 per gallon, with capacity up 2% to 3%, unit revenue up low double digits and non-fuel unit costs up low to mid single digits. The company said nearly all planned growth will come from long-haul international flying from Seattle, while North America capacity will be essentially flat. June produced double-digit unit revenue growth and double-digit pretax profit margins, and the airline said it returned to profitability in June. Demand outside Hawai'i remained resilient, with premium revenue up 15%, cargo revenue up 21%, managed corporate revenue up 30% and loyalty cash remuneration up 19%. Alaska said historic rainstorms in Hawai'i in March reduced second-quarter system unit revenue by about 3 points, above the 2 points it had originally expected, though it expects Hawai'i trends to recover toward historical levels in September. The company also highlighted integration progress with Hawaiian Airlines, including moving to a single passenger service system, expanding Seattle transatlantic service to Rome, London and Reykjavik, and raising $1 billion in financing to bolster liquidity amid elevated fuel prices.