third quarter 2026
Filed Oct 20, 2026Alaska Air Group reports third quarter 2026 results: GAAP loss per share of ($1.32) and adjusted earnings per share, excluding certain tax impacts, of $0.36.
Revenue and unit revenue increased strongly, but elevated fuel expense, higher operating costs and a cumulative tax adjustment resulted in a GAAP net loss and a full-year adjusted loss outlook.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total operating revenue, three months ended September 30, 2026GAAP | $4.31B | – | 14 % |
| Passenger revenue, three months ended September 30, 2026GAAP | $3.88B | – | 13 % |
| Loyalty program other revenue, three months ended September 30, 2026GAAP | $263M | – | 32 % |
| Cargo and other revenue, three months ended September 30, 2026GAAP | $160M | – | 13 % |
| Total operating expenses, three months ended September 30, 2026GAAP | $4.23B | – | 17 % |
| Wages and benefits, three months ended September 30, 2026GAAP | $1.29B | – | 5 % |
| Variable incentive pay, three months ended September 30, 2026GAAP | $68M | – | (4 %) |
| Aircraft fuel, three months ended September 30, 2026GAAP | $1.21B | – | 60 % |
| Aircraft maintenance, three months ended September 30, 2026GAAP | $257M | – | 8 % |
| Aircraft rent, three months ended September 30, 2026GAAP | $66M | – | 3 % |
| Landing fees and other rentals, three months ended September 30, 2026GAAP | $333M | – | 9 % |
| Contracted services, three months ended September 30, 2026GAAP | $163M | – | 8 % |
| Selling expenses, three months ended September 30, 2026GAAP | $118M | – | 10 % |
| Depreciation and amortization, three months ended September 30, 2026GAAP | $216M | – | 6 % |
| Food and beverage service, three months ended September 30, 2026GAAP | $110M | – | 10 % |
| Third-party regional carrier expense, three months ended September 30, 2026GAAP | $71M | – | (1 %) |
| Other operating expense, three months ended September 30, 2026GAAP | $298M | – | 16 % |
| Special items - operating, three months ended September 30, 2026GAAP | $25M | – | (61 %) |
| Operating income, three months ended September 30, 2026GAAP | $82M | – | (45 %) |
| Total non-operating expense, three months ended September 30, 2026GAAP | ($64) million | – | 73 % |
| Income before income tax, three months ended September 30, 2026GAAP | $18M | – | – |
| Income tax expense, three months ended September 30, 2026GAAP | $165M | – | – |
| Net loss, three months ended September 30, 2026GAAP | ($147) million | – | – |
| Basic earnings (loss) per share, three months ended September 30, 2026GAAP | ($1.32) | – | – |
| Diluted earnings (loss) per share, three months ended September 30, 2026GAAP | ($1.32) | – | – |
| GAAP pretax margin, three months ended September 30, 2026GAAP | 0.4 % | – | – |
| Adjusted pretax margin, three months ended September 30, 2026non-GAAP | 1.1 % | – | – |
| Adjusted net loss, three months ended September 30, 2026non-GAAP | ($35) million | – | – |
| Adjusted earnings (loss) per share, three months ended September 30, 2026non-GAAP | ($0.31) | – | – |
| Adjusted net income excluding certain tax impacts, three months ended September 30, 2026non-GAAP | $40M | – | – |
| Adjusted earnings per share excluding certain tax impacts, three months ended September 30, 2026non-GAAP | $0.36 | – | – |
| Total operating revenue, nine months ended September 30, 2026GAAP | $11.67B | – | 10 % |
| Operating loss, nine months ended September 30, 2026GAAP | ($365) million | – | NM |
| Net loss, nine months ended September 30, 2026GAAP | ($416) million | – | – |
| Diluted earnings (loss) per share, nine months ended September 30, 2026GAAP | ($3.70) | – | – |
| Adjusted net loss, nine months ended September 30, 2026non-GAAP | ($329) million | – | – |
| Adjusted earnings (loss) per share, nine months ended September 30, 2026non-GAAP | ($2.93) | – | – |
| CASMex, three months ended September 30, 2026non-GAAP | 11.46¢ | – | 4.4% |
| RASM, three months ended September 30, 2026other | 17.21¢ | – | 11.7% |
| PRASM, three months ended September 30, 2026other | 15.52¢ | – | 10.9% |
| Yield, three months ended September 30, 2026other | 18.73¢ | – | 13.4% |
| Load factor, three months ended September 30, 2026other | 82.8% | – | (2.0) pts |
| ASMs, three months ended September 30, 2026other | 25,031 (000,000) | – | 2.4% |
| Revenue passengers, three months ended September 30, 2026other | 15,706 (000) | – | (1.1)% |
| Fuel cost per gallon, three months ended September 30, 2026other | $3.94 | – | 57.0% |
| Fuel gallons, three months ended September 30, 2026other | 308 (000,000) | – | 1.7% |
| Operating fleet, three months ended September 30, 2026other | 424 | – | 18 a/c |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Passenger revenueThird-quarter passenger revenue was reported in the condensed consolidated statements of operations. | $3.88B | – | 13 % |
| Loyalty program other revenueLoyalty program cash remuneration grew 21% to $721 million in the third quarter. | $263M | – | 32 % |
| Cargo and other revenueCargo and other revenue was reported in the condensed consolidated statements of operations. | $160M | – | 13 % |
Q4 2026 outlook
- Tax rateapproximately 20%
- NoteCapacity (ASMs) % change versus 2025: Up 1% to 1.5%
- NoteRASM % change versus 2025: Up low double-digits
- NoteCASMex % change versus 2025: Up mid single-digits
- NoteEconomic fuel cost per gallon: $4.65 to $4.85
- NoteAdjusted loss per share: ($2.50) to ($2.00)
- NoteQ4 loss per share guidance assumes non-operating expense of approximately $70 million
- NoteQ4 loss per share guidance assumes shares outstanding of approximately 112.5 million
- NoteFull year adjusted loss per share: ($5.50) to ($5.00)
- NoteFull-year outlook includes $1.8 billion in fuel expense above our plan
What drove it
- Revenue increased 14% year-over-year to $4.3 billion on 2.4% capacity growth.
- RASM increased 11.7% and yield increased 13.4% year-over-year in the third quarter.
- September yield increased approximately 17% year-over-year.
- Premium revenue grew approximately 25% and represented more than 36% of total revenue.
- Diversified revenue represented 54% of total revenue.
- Managed corporate revenue increased 30%.
- The Company expanded its Seattle international network to nine routes, with Paris, Athens, Osaka and Papeete additions.
- The Company announced its intent to join the Atlantic and Pacific Joint International Businesses with oneworld and global partners.
Concerns
- Aircraft fuel expense increased 60 % year-over-year to $1,214 million in the third quarter.
- Fuel cost per gallon increased 57.0% year-over-year to $3.94.
- The Company cited Hawaiʻi headwinds, pressure from strategic growth markets investments and rapid international expansion.
- Load factor declined (2.0) pts year-over-year to 82.8%.
- The revised annual effective tax rate caused a $75 million cumulative catch-up adjustment that reduced third-quarter adjusted earnings per share by ($0.67).
- The Company expects elevated fuel costs to remain a significant headwind to near-term profitability.
- Adjusted net debt to EBITDAR was 5.5x at September 30, 2026, compared with 2.9x at December 31, 2025.
What to watch
- Fourth-quarter capacity growth is expected to be concentrated in international flying.
- Fourth-quarter unit revenue is expected to increase in the low double digits year-over-year and improve sequentially on a gross basis.
- Fourth-quarter non-fuel unit costs are expected to increase in the mid-single digits, reflecting lower capacity growth.
- Fourth-quarter economic fuel cost guidance is $4.65 to $4.85 per gallon.
- Execution of Aurora, Leihōkū and Premium Reserve premium products.
- Atmos Rewards enhancements, including the Atmos debit card planned for early 2027.
- Launch of Seattle service to Athens, Paris, Osaka and Papeete beginning in spring 2027.
Balance sheet and cash flow
- Generated $755 million of operating cash flow during the first nine months of 2026.
- Property and equipment additions were ($965) million during the nine months ended September 30, 2026, compared with ($963) million in the prior-year period.
- Adjusted capital expenditures were $1,027 million during the nine months ended September 30, 2026, compared with $870 million in the prior-year period.
- Cash and cash equivalents were $835 million at September 30, 2026, compared with $627 million at December 31, 2025.
- Marketable securities were $1,396 million at September 30, 2026, compared with $1,496 million at December 31, 2025.
- Held $3.3 billion in available liquidity, including unrestricted cash, marketable securities, and undrawn credit facilities.
- Long-term debt and finance leases were $6,159 million at September 30, 2026, compared with $5,555 million at December 31, 2025.
- Adjusted net debt was $5,288 million at September 30, 2026, compared with $4,770 million at December 31, 2025.
- Debt-to-capitalization ratio, including leases, was 66 % at September 30, 2026, compared with 59 % at December 31, 2025.
- Adjusted net debt to EBITDAR was 5.5x for the twelve months ended September 30, 2026, compared with 2.9x for the twelve months ended December 31, 2025.
- Had approximately $20 billion of unencumbered assets at September 30, 2026, including 134 aircraft and the unencumbered portion of loyalty program assets.
Analysis
Third-quarter revenue growth was strong relative to capacity growth. Total operating revenue increased 14 % to $4,308 million while ASMs increased 2.4%, lifting RASM 11.7%. Passenger revenue increased 13 %, loyalty program other revenue increased 32 %, and cargo and other revenue increased 13 %. Yield increased 13.4% to 18.73¢, while load factor declined (2.0) pts to 82.8%.
The revenue strength did not offset cost pressure. Total operating expenses increased 17 % to $4,226 million, led by a 60 % increase in aircraft fuel expense to $1,214 million. Fuel cost per gallon rose 57.0% to $3.94. CASMex increased 4.4% to 11.46¢. GAAP operating income declined 45 % to $82 million, and GAAP pretax margin declined to 0.4 % from 2.9 %.
Tax accounting materially affected reported quarterly earnings. The Company recorded GAAP net loss of ($147) million, or ($1.32) per diluted share, and adjusted net loss of ($35) million, or ($0.31) per share. A $75 million cumulative catch-up adjustment related to tax benefits on first-half losses reduced third-quarter adjusted earnings per share by ($0.67). Excluding certain tax impacts, adjusted net income was $40 million and adjusted earnings per share was $0.36.
Commercial initiatives emphasize higher-value and diversified revenue. Premium revenue grew approximately 25% and represented more than 36% of total revenue, while diversified revenue represented 54% of total revenue. Loyalty program cash remuneration grew 21% to $721 million, and managed corporate revenue increased 30%. The Company also expanded its Seattle international network to nine routes and announced an intent to join Atlantic and Pacific Joint International Businesses with oneworld and global partners.
Liquidity included $3.3 billion of available liquidity and $755 million of operating cash flow for the first nine months of 2026. However, leverage increased, with adjusted net debt of $5,288 million and adjusted net debt to EBITDAR of 5.5x. Fourth-quarter guidance calls for capacity growth of 1% to 1.5%, low-double-digit RASM growth and mid-single-digit CASMex growth, but also assumes economic fuel cost of $4.65 to $4.85 per gallon. The full-year outlook is an adjusted loss per share of ($5.50) to ($5.00), inclusive of $1.8 billion in fuel expense above plan.
Management, verbatim
At Investor Day, we laid out a clear strategy for building a stronger, more diversified business, and we're executing it: growing premium, international, cargo and Atmos Rewards, and investing in the guest experience.
Ben Minicucci, Alaska Air Group CEO
Not in the filing
stated, not guessed- Gross margin was not reported.
- Gross profit was not reported.
- Q4 2026 revenue guidance was not reported.
- Q4 2026 operating-expense guidance was not reported as a dollar amount.
- Prior-release outlook was not provided, so no comparison against prior guidance is available.
- Share repurchases and dividends during the reported period were not reported.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.