SerpApi.Org
Alaska Air Group swung to a loss in the second quarter as it struggled with rising fuel costs, but said it expects a stronger performance in the current third quarter.
The Seattle-based airline on Tuesday reported a loss of $76 million, or 68 cents a share, compared with a profit of $172 million, or $1.42 a share, a year earlier.
The loss was driven by a spike in fuel costs as the war in Iran constrained fuel supplies and lowered fares for air carriers. Alaska said its economic fuel cost was $4.43 a gallon, up 85% year over year and adding $600 million in incremental costs during the quarter.
“Our second-quarter results were defined by a fuel spike outside our control – but underneath it, this company is executing better than ever,” Chief Executive Officer Ben Minicucci said. “Absent the fuel headwind, we would have delivered a solidly profitable quarter.”
The company in April suspended its full-year guidance, citing uncertainty over fuel prices. But on Tuesday, Alaska issued guidance for the third quarter, projecting economic fuel prices of $3.75 a gallon and a widening spread between unit revenue and unit costs.
Alaska projected adjusted earnings in a range of breakeven to $1.00 a share, with capacity up between 2% and 3%. “We expect a meaningful inflection in financial performance beginning in the third quarter,” the company said.
Analysts polled by FactSet are expecting $1.47 a share in adjusted earnings during the third-quarter
Stripping out certain one-time items, Alaska reported an adjusted second-quarter loss of 92 cents a share. Analysts were expecting a loss of 99 cents a share.
Revenue grew to $4.07 billion from $3.7 billion a year prior, missing analyst expectations of $4.09 billion.
Capacity rose 1% compared to the same period a year earlier.
Shares in Alaska were down 2.1% in after-hours trading on Tuesday.
The company also said Tuesday that it entered long-term lease agreements to add four 737-800 Boeing Converted Freighters to its cargo fleet, which are expected to enter service in the first half of next year.
Alaska also plans to replace Hawaiian Airlines’s retiring Boeing 717 fleet with Hawaiian-branded Boeing 737-800 aircraft, with an enhanced onboard experience and Honolulu-based pilots and flight attendants. The planned fleet will focus on Neighbor Island service, Alaska said.
Write to Elias Schisgall at [email protected]